[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
REGIONAL ENERGY RELIABILITY AND SECURITY: DOE AUTHORITY TO ENERGIZE THE
CROSS SOUND CABLE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ENERGY AND AIR QUALITY
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
MAY 19, 2004
__________
Serial No. 108-83
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
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------------------------------
COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
W.J. ``BILLY'' TAUZIN, Louisiana JOHN D. DINGELL, Michigan
RALPH M. HALL, Texas Ranking Member
MICHAEL BILIRAKIS, Florida HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York
JAMES C. GREENWOOD, Pennsylvania FRANK PALLONE, Jr., New Jersey
CHRISTOPHER COX, California SHERROD BROWN, Ohio
NATHAN DEAL, Georgia BART GORDON, Tennessee
RICHARD BURR, North Carolina PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
CHARLIE NORWOOD, Georgia ANNA G. ESHOO, California
BARBARA CUBIN, Wyoming BART STUPAK, Michigan
JOHN SHIMKUS, Illinois ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona GENE GREEN, Texas
CHARLES W. ``CHIP'' PICKERING, KAREN McCARTHY, Missouri
Mississippi, Vice Chairman TED STRICKLAND, Ohio
VITO FOSSELLA, New York DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania TOM ALLEN, Maine
MARY BONO, California JIM DAVIS, Florida
GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois
LEE TERRY, Nebraska HILDA L. SOLIS, California
MIKE FERGUSON, New Jersey CHARLES A. GONZALEZ, Texas
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho
JOHN SULLIVAN, Oklahoma
Bud Albright, Staff Director
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Energy and Air Quality
RALPH M. HALL, Texas, Chairman
CHRISTOPHER COX, California RICK BOUCHER, Virginia
RICHARD BURR, North Carolina (Ranking Member)
ED WHITFIELD, Kentucky TOM ALLEN, Maine
CHARLIE NORWOOD, Georgia HENRY A. WAXMAN, California
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
Vice Chairman FRANK PALLONE, Jr., New Jersey
HEATHER WILSON, New Mexico SHERROD BROWN, Ohio
JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland
CHARLES W. ``CHIP'' PICKERING, GENE GREEN, Texas
Mississippi KAREN McCARTHY, Missouri
VITO FOSSELLA, New York TED STRICKLAND, Ohio
GEORGE RADANOVICH, California LOIS CAPPS, California
MARY BONO, California MIKE DOYLE, Pennsylvania
GREG WALDEN, Oregon CHRIS JOHN, Louisiana
MIKE ROGERS, Michigan JIM DAVIS, Florida
DARRELL E. ISSA, California JOHN D. DINGELL, Michigan,
C.L. ``BUTCH'' OTTER, Idaho (Ex Officio)
JOHN SULLIVAN, Oklahoma
JOE BARTON, Texas,
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Blumenthal, Richard, Attorney General, State of Connecticut.. 45
DeLauro, Hon. Rosa L., a Representative in Congress from the
State of Connecticut....................................... 19
Donahue, Jeffrey A., Chairman and CEO, Cross-Sound Cable
Company, LLC............................................... 52
Kessel, Richard, Chairman and CEO, Long Island Power
Authority.................................................. 63
King, Hon. Peter T., a Representative in Congress from the
State of New York.......................................... 22
Museler, William J., President and CEO, New York ISO......... 49
Otis, Lee, General Counsel, U.S. Department of Energy........ 42
Schumer, Hon. Charles E., a United States Senator from the
State of New York.......................................... 4
Shays, Hon. Christopher, a Representative in Congress from
the State of Connecticut................................... 27
Wood, Patrick, III, Chairman, Federal Energy Regulatory
Commission................................................. 38
Additional material submitted for the record:
Ackerman, Hon. Gary L., a Representative in Congress from the
State of New York, prepared statement of................... 75
Clinton, Hon. Hillary Rodham, a United States Senator from
the State of New York...................................... 75
McCarthy, Hon. Carolyn, a Representative in Congress from the
State of New York, prepared statement of................... 77
Simmons, Hon. Rob, a Representative in Congress from the
State of Connecticut, prepared statement of................ 76
Spitzer, Eliot, New York State Attorney General, prepared
statement of............................................... 78
(iii)
REGIONAL ENERGY RELIABILITY AND SECURITY: DOE AUTHORITY TO ENERGIZE THE
CROSS SOUND CABLE
----------
WEDNESDAY, MAY 19, 2004
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Energy and Air Quality,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2322, Rayburn House Office Building, Hon. Ralph Hall
(chairman) presiding.
Members present: Representatives Hall, Cox, Shimkus,
Pickering, Radanovich, Rogers, Issa, Otter, Barton (ex
officio), Boucher, Waxman, Green, and McCarthy.
Staff present: Jason Bentley, majority counsel; Mark
Menezes, majority counsel; Bob Rainey, fellow; Peter Kielty,
legislative clerk; Sue Sheridan, minority counsel; Bruce
Harris, minority professional staff member.
Also present: Representatives Bishop of New York and
Israel.
Mr. Hall. It appears that the main ones are present, so we
will get underway.
Today's hearing is going to provide us with a very good
example of our Nation's energy problems, and I think we need to
pass the Comprehensive Energy Bill. It is about a dispute
between two States with implications for regional reliability.
The Cross Sound Cable is the first of its kind, merchant
transmission project and approved by the Environmental and
Siting Agencies of New York and Connecticut. It is approved by
the U.S. Army Corps of Engineers. The Public Utility
Commissions of both States found that the project would benefit
the consumers in their State.
When the project was unable to comply with its permits, the
owners immediately contacted the appropriate agencies. While
most of the agencies were willing to work and work together and
try to work out the differences, Connecticut's response--and
they made their decision to shut the project down. Not only did
they shut it down completely, the State legislature imposed a
moratorium preventing State agencies from issuing or modifying
any new permits for energy projects in that area. They recently
reissued the moratorium and apparently intend to keep doing so
indefinitely.
The result is that the Cross Sound Cable investors can't
negotiate with the State to address their problems, and they
can't get permits to do what's needed to comply with the
original permit. They are really left with no recourse.
So today, we will hear testimony on the benefits of the
Cross Sound Cable and how it has been used over the past 6
months.
Following the blackout last August 14, Secretary of Energy
used his emergency powers to order the cable put into
operation. Testimony today will address how the cable was used
to stabilize the grid in the northeast and how it can help
relieve transmission congestion in New York and the New England
RTO.
When it is all said and done, I think we will see, once and
for all, that the Cross Sound Cable will save money for
consumers in both New York and Connecticut by improving
reliability and reducing the delivered cost of electricity.
Because of these benefits, we included a provision in the
Comprehensive Energy Bill that now awaits two votes. We need
two senatorial votes, just two.
We could get them both from New York, perhaps, if we
included a provision in the Comprehensive Energy Bill that
resolves this dispute in favor of keeping the Cross Sound Cable
in operation. It is my strong desire that the appropriate
parties in Connecticut and New York--two great States--can come
together to reach some kind of agreement.
I fear however that Connecticut's just-say-no attitude to
regional energy security and reliability is going to require an
act of Congress to resolve. And that is kind of a shame,
because we ought to get a business decision rather than a
congressional decision.
The reliability assessment for this summer indicates that
the northeast should have sufficient generation capacity to
meet the region's needs. However, the demand of growth will
require significant new investment in the years to come, and
the reality of transmission congestion may have significant
effects on reliability and the cost of power this summer.
Long Island is one of those congestion points identified,
and the assessments were done under the assumption that the
Cross Sound Cable would be operational. Since it is no longer
in service, we can expect that supplies will be tighter than
predicted this summer and congestion worse for the northeast.
I hope this hearing today between two great States, two
great areas, well-represented, will help kickstart the dialog
between these two States to resolve their differences and
realize that they both need all the power they can get.
With that said, I look forward to hearing the testimony of
our witnesses, great witnesses, and get a better understanding
of just what some of Connecticut and New York's concerns are.
We have Steve Israel and Tim Bishop, not members of this
committee. We ask that they sit in and be given the rights of
questioning the witnesses as other members of the committee.
Is there objection?
The Chair hears none. They are accepted.
Without objection, the Chair is going to proceed pursuant
to Committee Rule 4(e) and recognize members for 3 minutes for
openings statements. If they differ, this time will be added to
their opening round of questions.
At this time, recognize the gentleman from Virginia.
Mr. Boucher. Well, thank you very much, Mr. Chairman. And
thank you for convening today's hearing. We will have an
opportunity this morning to evaluate the role of the Cross
Sound Cable in addressing the electricity needs of New York and
Connecticut.
The cable is a 330-megawatt undersea merchant transmission
line connecting the regional transmission system in Connecticut
with the New York Independent System Operator on Long Island.
The line was buried beneath the Long Island Sound in 2002,
although it was not activated at that time. Opponents of the
cable, largely from Connecticut, raise environmental concerns
such as the question of whether the line is buried deeply
enough at certain points as it crosses Long Island Sound.
Officials from Connecticut have additional objections stemming
from concerns that the line would encourage power flows out of
Connecticut, which itself is suffering from electricity
transmission constraints.
Supporters of the cable believe that its use would bolster
transmission system reliability both in Connecticut and in New
York and also help to meet a projected power shortage on Long
Island during the course of this summer.
Following the blackout last August, Secretary Abraham
issued an emergency order activating the line to relieve
electricity shortages on Long Island. Two weeks ago, on May 7,
secretary Abraham declared an end to the emergency conditions
that necessitated the lines use and accordingly rescinded the
emergency order.
At that time, the Secretary pointed to conclusions reached
in the joint task force report on the blackout that operation
of the Cross Sound Cable would not have prevented the spread of
the blackout. The conference report on H.R. 6, the
Comprehensive Energy Bill contains a provision that would have
blocked the Department of Energy from terminating the order
energizing the cable. That provision directed that the order
remain in effect unless specifically rescinded by an act of
Congress.
Since the recission of the order, Senator Clinton and
Representatives Tim Bishop and Steve Israel have introduced in
the Senate and in the House legislation virtually identical to
the provisions in H.R. 6 relating to the Cross Sound Cable. The
bills introduced by the New York delegation would reverse the
recission and keep the cable in operation under the emergency
order unless Congress acts to reverse the order.
We have with us sitting on our panel today Representatives
Bishop and Israel, and I also want to extend a welcome to them.
Today's hearing will give us an opportunity to learn about
the power generation and transmission needs of New York,
Connecticut and the New England region and the role that the
Cross Sound Cable plays in addressing those needs.
We also welcome the testimony from our distinguished
colleagues, former Member of the House and Member of the
Senate, Senator Schumer, and representatives in Congress from
both New York and Connecticut.
We also welcome testimony this morning from the chairman of
the FERC, general counsel of the Department of Energy, the New
York Independent System Operator, the Attorney General of the
State of Connecticut and both the merchant company which
operates the cable and the Long Island power authority. Mr.
Chairman, it is a timely hearing, and I commend you for
convening it, and I yield back.
Mr. Hall. I thank you. And if there is no objection,
Senator Schumer has other things that he has to do, and we will
delay the opening statements, if you don't mind, until we hear
from Senator Schumer.
And I am sure he is going back over there and going to work
on trying to pass that energy bill to where we won't even need
this.
Mr. Issa. Mr. Chairman, is that a commitment?
Senator Schumer. All we need is two little changes, and we
will be with you all the way.
Mr. Hall. He is a highly respected former Member of the
House and a great worker over in the Senate.
Senator Schumer, we are pleased to recognize you. Thank
you.
STATEMENT OF HON. CHARLES E. SCHUMER, A UNITED STATES SENATOR
FROM THE STATE OF NEW YORK
Senator Schumer. Well, thank you Mr. Chairman. I want to
thank your courtesy in inviting me to speak at this hearing and
remember the days we were both Members of the class of 1980
that came here in the Congress.
Mr. Hall. You have done well, and I have gone wrong.
Senator Schumer. You have done pretty good, too. You are a
chairman, I am not.
Anyway, thank you and I want to thank my friend, Rick
Boucher, the ranking member of the committee also. We served
much time together on the Judiciary Committee.
And my other colleagues here, some of whom I see in the gym
early in the morning. I still go to the House gym, Mr.
Chairman, right in this building.
Ms. DeLauro. Where they still don't allow women.
Senator Schumer. No, they allow women.
Mr. Shays. Mr. Chairman, is this Senate time or House time?
Mr. Hall. Don't you have to hurry?
Senator Schumer. Chris is right. Ralph, Chris is right.
When I got to the Senate, and they said, ``How much time do
you need to speak on the floor,'' and I think, having been in
the House for 18 years, I said, ``Well, 5 minutes,'' which
would be a generous amount of time in the House, they said no
one speaks on anything for less than 20 minutes on the Senate
floor. So pardon me. Anyway, let me get to my testimony.
The bottom line, Mr. Chairman, is that I strongly want to
voice my support for reactivation of the Cross Sound Cable. And
in fact, I hope we don't have to go the legislative route,
which you know can be The Perils of Pauline.
Today, we are urging the Department of Energy to step up to
the plate, do the right thing, and reactivate the cable, plain
and simple. The operation of the Cross Sound Cable is critical
to insuring reliability and reducing electric rates throughout
the northeast.
A failure to reach a solution that will allow the cable to
operate will not only hurt both sides of Long Island Sound, but
will set a dangerous precedent and threaten electric
reliability from one end of the country to the other by
undermining even responsible efforts to construct new
transmission infrastructure.
I join my colleagues--I am glad that Pete King is here. Our
colleagues on Long Island, Tim Bishop and Steve Israel are
here. And we are united in our voice in this regard.
And I have great respect for both my colleagues from
Connecticut, but we are going to have to agree to disagree on
this issue.
Now, let me just make a few points here. One, this cable
made a lot of sense before the August 14 blackout, but it makes
just about complete sense now. And that is why the Department
of Energy reactivated--activated the cable, because there was
an emergency. God forbid, we have some hot days and there are
brownouts on Long Island, it will be too late for the
Department of Energy to declare an emergency ex post facto. We
need them, again, to step up to the plate right now.
Let me make a few of the arguments. We all know--and you
have laid it out very well Mr. Chairman--the need for
interconnectivity. This cable will benefit citizens on both
sides of Long Island Sound. When there are shortages of
electricity which occur in ways that we don't even know, as the
blackout showed, to have this insurance of this cable which can
send power from one part of the power grid to the other, that
are not directly connected, makes imminent sense.
The Department of Energy never should have rescinded their
ruling that this cable was needed. As a result of the
Department of Energy's decision, the Cross Sound Cable is
powering political controversy when it should be powering
homes. Unfortunately, this is nothing new about the project.
Since it was first proposed, it has encountered political
objections that have, at each step of the way, threatened to
prevent the cable from coming to fruition. The current status
is the latest and most frustrating example. As a condition of
the permit issued for the cable, by the Connecticut Department
of Environmental Protection, the cable must meet a depth
requirement of 48 feet below the water's surface and 6 feet
below the seabed. The cable satisfies this requirement in all
but seven places which, taken together, comprise 700 feet of
the 24-mile cable's length. And they miss the requirement only
by 6 feet.
To dispel any notion that this has environmental problems,
both the Army Corps of Engineers and DEP acknowledged that
operating the cable at its current depth would present no
environmental threat. And yet the Connecticut DEP still did not
allow the cable to operate and, as you mentioned, legislatively
passed a moratorium.
So Connecticut's been successful in stopping the operation
of a cable by blocking attempts to solve an environmental
problem it acknowledges doesn't exist.
But those regulatory gymnastics aren't going to cut it as
an explanation if the lights go out. That is why the Department
of Energy needs to step up to the plate and do what every
objective observer knows is the right thing to do and
reactivate the cable to provide reliability this summer.
One other point, just recently, Connecticut got permission
to take sludge from New Haven Harbor, the very area we are
talking about, and put it in the Long Island Sound. No one
disputes that the sludge has more environmental problems to the
Long Island Sound than the cable. And yet from the Connecticut
State officials, particularly the gentleman leading the charge,
we don't hear a thing.
If the goal was the environmental viability of the Long
Island Sound, you would certainly have a larger outcry against
the sludge dumping than against the cable. So something is not
right here. Any school child, whether they are in Northport or
New Haven, would be able to tell you that toxic sludge is more
of an environmental threat than an underground electric cable.
It seems that Connecticut opposition to the Cross Sound Cable
is not out of environmental concern but rather out of
environmental convenience.
The bottom line, Mr. Chairman, the operation of the Cross
Sound Cable is crucial to the power and economic security needs
of Long Island. And that is why I have been an ardent
supporter. I know it is said--I read the Attorney General's
testimony. He said Long Island has done nothing to increase its
own power needs. Long Island built--LIPA, the energy utility
there, built 15 power plants that include 600 new megawatts for
Long Island. I stood with the environmental groups. I had to
sort of drag some of them there to support another thousand
megawatt plant in Melville, which will be on the road to
construction. But as you know, the cable is insurance. It is a
safety valve when, in our disconnected northeast power grid,
one side of the sound or the other side has trouble.
Now, in conclusion, Mr. Chairman, we have no problem being
a good neighbor to Connecticut. Senator--Congressman Shays
reminded me that our last dispute was over Gardners Island in
1700 or something like that. In fact----
Mr. Hall. I remember that.
Senator Schumer. You remember that. Class of 1980. That was
1780. Let me just say, Mr. Chairman, in fact, most of the
natural gas that is used in Connecticut at one point or another
goes through New York Harbor.
We are interconnected. We need one another. We work much
better when we work together. I am hopeful that either
Connecticut will find some kind of compromise--and I know that
Senator Dodd has stated publicly that he would try to seek a
compromise, and I welcome that effort--or the Department of
Energy step up to the plate and do the right thing. They don't
have much time to wait. By Memorial Day, the heating season
comes. And that is when we start our problems. So we hope they
will step up to the plate and do what we have to do and avoid
the need to go through the legislative path.
With that, Mr. Chairman, I would ask unanimous consent my
entire statement be put in the record.
[The prepared statement of Hon. Charles Schumer follows:]
Prepared Statement of Hon. Charles E. Schumer, a U.S. Senator from the
State of New York
I would like to thank Chairman Hall, Ranking Member Boucher, and
the rest of the members of the Subcommittee for allowing me to voice my
support for the reactivation of the Cross Sound Cable. The operation of
the Cross Sound Cable is critical to ensuring reliability and reducing
electric rates throughout the Northeast.
A failure to reach a solution that will allow the cable to operate
will set a dangerous precedent and threaten electric reliability by
undermining even environmentally responsible efforts to construct new
transmission infrastructure.
Like my colleague on this panel, Rep. King, as well as my fellow
New Yorkers Rep. Bishop and Rep. Israel, I have been a strong advocate
for the cable and believe that it represents a creative,
environmentally responsible solution for meeting power needs on Long
Island as well as Connecticut. In the wake of the August 14th blackout
I believe even more strongly that the Cross Sound Cable provides a
vital capability to prevent future blackouts by quickly transmitting up
to 330 MW of electricity, or enough power to serve 330,000 homes.
The Department of Energy's decision to shut down the cable and take
this capacity off of the table as we head into the hot summer months is
shortsighted and dangerously heightens the risk that we will see a
repeat of last summer's blackout. As a result of the Department of
Energy's decision, the Cross Sound Cable is powering political
controversy when it should be powering homes.
Unfortunately this is nothing new for the project. Since it was
first proposed, it has encountered political objections that have at
each step threatened to prevent the benefits of the cable from coming
to fruition. The cable's current status is the latest and most
frustrating example.
As a condition of the permit issued for the Cross Sound Cable by
the Connecticut Department of Environmental Protection, the cable must
meet a depth requirement of 48 feet below the water's surface and six
feet below the seabed. The cable satisfies this requirement in all but
seven places which taken together comprise approximately 700 feet of
the cable's 24-mile length, and only miss the requirements by six feet.
Despite the fact that the Army Corps of Engineers and the DEP
itself have acknowledged that operating the cable at its current depth
would present no environmental threat, the DEP will still not allow the
cable to operate. Connecticut has also enacted a moratorium that
prevents the supposed shortfalls from being rectified.
Connecticut's been successful in stopping the operation of the
cable by blocking attempts to solve an environmental problem it
acknowledges doesn't exist, but those regulatory gymnastics aren't
going to cut it as an explanation if the lights go out. That's why the
Department of Energy needs to step up and do what every objective
observer knows is the right thing to do and reactivate the cable to
provide reliability this summer. In the newly deregulated markets of
the Northeast everyone will suffer if the grid is not upgraded and more
strongly connected by projects like the Cross Sound Cable.
It's not matter of theory that the operation of the Cross Sound
Cable would have no detrimental environmental impacts, it's been
clearly demonstrated. As a result of Secretary Abraham's emergency
order following the August 14th blackout we have had a chance to see
through actual operations that the cable is not an environmental threat
and plays a critical role in ensuring electric reliability throughout
the Northeast.
I also find the claims of environmental concern issued by those in
Connecticut, not necessarily include my colleagues here, who oppose of
the cable to be inconsistent with their stance on other issues. Some
have advocated the dumping of toxic sludge into the Long Island Sound
as part of a project that would deepen Connecticut's harbor, creating
an economic benefit. Any schoolchild in Northport or New Haven would be
able to tell you that toxic sludge is more of an environmental threat
than an underground electric cable. It seems that Connecticut
opposition to the Cross Sound Cable is not out of environmental concern
but environmental convenience.
The operation of the Cross Sound Cable is crucial to the power and
economic security needs of Long Island, which is why I have been such
an ardent supporter of the project. However, I also believe that
Connecticut and New York have a responsibility to be good neighbors to
each other, and the Cross Sound Cable would allow that.
If allowed to operate, the Cross Sound Cable will increase the
availability of imported power to Connecticut both directly and by
helping to loop power through the already operating Norwalk cable.
In fact, during its operation, the cable was available on 108
instances to provide voltage support to Connecticut, bolstering
reliability. It was in fact the absence of this type of support that
exacerbated the August 14th blackout.
The Cable also transmitted power directly to Connecticut,
automatically responded to a number of unanticipated system
disturbances, and could help displace generation from old, air
polluting power plants. In the short time that the cable has been
allowed to operate, it has proven to be a benefit not just to Long
Island, but also to the region as a whole.
New York has no problem being a good neighbor to Connecticut. In
fact, almost all of the natural gas used in Connecticut at one point or
another is transported through New York. However it seems like the
neighbor we have tried to be so good to has just put up a regulatory
fence and is threatening to turn out our lights this summer.
The continuing objections and obstacles to the operation of the
Cross Sound Cable are creating a public policy failure in the making by
placing irrational regulatory obstruction over the needs of families
and businesses in the Northeast. In order to rise above this regulatory
game of ``Gotcha'' and prevent blackouts this summer, the Department of
Energy needs to show some leadership and reactivate the cable.
It's even more clear after the events of last summer that the
Department has a responsibility to ensure that blackouts don't again
affect millions of Americans. If the Department does not activate the
cable and blackouts result the cause would be nothing short of
negligence.
By paving the way for the reactivation of the Cross Sound Cable,
Congress and the Administration have the opportunity to send the
message that needed improvements in transmission can be made, and that
the federal government has indeed made a serious commitment to
preserving reliability. I urge the Subcommittee to send that message
before it is too late.
Mr. Hall. Without objection, and if you would continue to
bless us with your presence----
Senator Schumer. I am going to stay Mr. Chairman.
Mr. Hall. Until the chairman of the big committee speaks,
in order that the chairman of the little committee can keep his
chairmanship.
I would ask you if you would--Joe Barton. We are going to
recognize Mr. Barton at this time for as much time as he needs
to consume.
Chairman Barton. I won't take that Mr. Chairman. I would
ask that my formal statement be included in the record.
[The prepared statement of Hon. Joe Barton follows:]
Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy
and Commerce
Today's hearing presents a number of interesting issues. Some of
these issues are addressed in the Conference Report for H.R. 6, the
comprehensive energy bill, which was passed by the House and is
awaiting action in the Senate. Other issues raised by today's hearing
will require renewed discussions between officials in Connecticut and
New York in order to be resolved. I hope that by the end of today's
hearing we have an agreement from the witnesses here today to work on
resolving both sets of issues.
The issues raised by today's hearing that would be resolved in the
comprehensive energy bill are as follows:
As to the question of whether the Cross Sound Cable should remain in
operation, the comprehensive energy bill keeps the cable
energized unless Congress decides it should be turned off.
As to the question of whether a State can delay a decision on a
natural gas pipeline indefinitely, the comprehensive energy
bill requires States to make a decision one way or another, and
removes the appeal of that decision to Federal court. This, and
other provisions in the comprehensive energy bill, will help
get projects, like the Islander East natural gas pipeline,
constructed.
These provisions in the comprehensive energy bill will help the
citizens of New York by increasing energy security and reliability,
reducing the price consumers pay for electricity, and providing more,
and more affordable, clean-burning natural gas to heat their homes and
generate electricity.
These provisions will also help the citizens of Connecticut, by
reducing transmission congestion costs in their State and, in the words
of the Connecticut Siting Council, ``enhance[ing] the inter-regional
electric transmission infrastructure and improve[ing] the reliability
and efficiencies of the electric system here in Connecticut as well as
in New York.'' If Connecticut is concerned that New York is not doing
enough to generate their own power, then help them construct a gas
pipeline to fuel their own power plants.
Other issues that may arise today will need to be worked out
between officials in New York and Connecticut. As to who should pay to
upgrade the existing transmission cables between Connecticut and New
York, that issue needs to be worked out between those States and the
FERC. On the question of whether New York is doing enough to build it's
own generation, I need to point out that there is an 1100 megawatt
power plant waiting to be approved that would supply much needed future
power to Long Island and New York City. To be fair, though, if folks in
Connecticut think New York should supply all of its own power needs, I
would only point out that Connecticut imports more than 15% of its
total annual electricity consumption from other States.
My point is that these are regional energy problems that require
regional energy solutions. Just like the examples of the Cross Sound
Cable situation and our inability to finish construction of the
Islander East gas pipeline, the comprehensive energy bill pending
before the Senate provides us with real solutions to our Nation's
energy problems.
We are two votes short of the sixty needed to defeat the filibuster
in the Senate. Fifty-eight Senators have voted in support of passing an
energy bill this year. Senator Schumer, who is testifying here today,
is leading the effort in the Senate to stop the energy bill. Two votes
are all we need Senator. I know there are things in the bill that you
may not like. There are things in there I would do differently. But
every provision in the bill is important to some region of the country
and some State. And together, they represent a balanced package, with
the broadest bipartisan support we will likely get this year. I know
you agree with me that the American people deserve a comprehensive
energy policy. Given your interest in resolving this Cross Sound Cable
dispute, I hope we can count on your vote in the Senate.
With that said, I hope this hearing today does two things:
(1) I hope officials in New York and Connecticut can start working
again to resolve their differences; and
(2) I hope it helps us all to better understand the need to pass a
comprehensive energy bill this Congress.
I look forward to hearing from our witnesses.
Mr. Hall. Without objection.
Chairman Barton. I know that Senator Schumer has to leave,
so I want to make a few comments. I do appreciate this panel.
It is good to see our friends in the House from New York and
Connecticut and, of course, our good friend from the Senate,
Senator Schumer, who is a former Member of this body.
My main point is more directed to you, Senator, since we
don't get to see you all the time over here. We have a
comprehensive energy bill that is been languishing in the
Senate for I guess about 6 months now. The issues that are
before us today are addressed in that bill.
We have a siting protocol, so that when States disagree, we
let the FERC and the Federal courts intervene in an expeditious
fashion. On the particular project in mind, the conference
report would allow that cable to continue to be energized
unless the Congress decided it should not be.
And I am not saying the Congress should intervene between
States. It looks like Connecticut and New York are trying to
work this out slowly but surely, and I think, over time, you
will.
But my request to you Senator Schumer, would be to try to
find a way in your heart, talk to your other Senator from New
York. We just moved a bill through the subcommittee and full
committee on the New York watershed. That is, I think, a bill
that you and Senator Clinton moved over there. So we are not
anti-New York, nor are we anti-Connecticut. I don't want my
Connecticut friends to think that. But I would really like to
see if we couldn't get that energy bill up for a vote. We only
need two more votes for cloture. And you and Senator Clinton
could be those two votes.
If there is an issue that is just so sensitized that we
need to work it out as a sidebar, I am sure the Speaker and the
Majority Leader and myself and Mr. Dingell and others would be
happy to work on that.
So you know, my request to you is, we have got gasoline
prices at all time highs. We have got natural gas prices at all
times highs. We have got coal prices at all time highs. Surely
think there ought to be a way to get two more senators to let
the energy bill come up for a vote in the Senate.
Senator Schumer. Okay.
Well, Mr. Chairman, if I might respond. And first, I very
much appreciate your coming and making the time, Mr. Chairman.
The bottom line is a simple one. As you know, the bill was
blocked in the Senate by a bipartisan coalition. In fact, every
Republican from the northeast, from New England and the
northeast, opposed the bill. And that is because the bill may
be very good for some regions of the country, but it does real
damage to those of us in the northeast.
Two issues in particular led me to work with your
colleagues, Republicans John Sununu and Judd Gregg to block the
bill. One is the issue of MTBEs and the right to sue. We have
here on Long Island, we have our whole watershed, we have 27
water districts who may not have any water anymore because the
MTBEs went into their water systems. We can't stand by as their
taxes might go up a thousand or $2,000 to have to build a new
watershed.
And the second was imposing ethanol on the East and West
Coasts. Our gas prices, as you say, are high enough. If this
energy bill passed, we would be forced to pay for ethanol, even
if we didn't buy it, which we wouldn't because it is so
expensive to ship from the Midwest. We would love a compromise.
In fact our bipartisan group, including--I guess it is five.
There are five Republican Senators from the northeast, all who
voted against it, every one of them. But our bipartisan group
has reached out and said you solve--you give us a waiver on
ethanol. You want to use ethanol in Texas or--well California
doesn't want to use ethanol. Illinois, you want to use it in
Illinois, that is great. Don't force us to use it when gas
prices are high enough.
And on MTBEs, allow the process to continue. We have had
negotiations with some of those who have spilled these MTBEs.
Long Island just has one aquifer. You pollute it and you ruin a
water supply for millions. So I would love to sit down with you
and work out those two pieces, as would all of our bipartisan
coalition. But the energy bill has to serve the whole country,
not just a portion of it.
Chairman Barton. Well, the energy bill that is being
blocked from a vote because of the two votes needed for
cloture----
Senator Schumer. It is four by the way. It went down two.
Chairman Barton. Has a very good reliability section on
electricity that would help the northeast tremendously. It
doubles the funding for the leaking underground storage tank
program that would solve the real problem of MTBEs. I mean, I
could go on and on. But if it never gets to a vote, I mean,
then there is no compromise at all if we can't get it up for a
vote.
Senator Schumer. It needed two votes about 4 months ago.
Now, it needs four votes.
Chairman Barton. Well, if I get you and Senator Clinton, it
is back down to, we need two votes.
Senator Schumer. Well, I can't speak for Senator Clinton.
You give us a waiver on ethanol, allow the MTBE process to
go forward, don't retroactively stop lawsuits that have been
going to help the districts, I will support the bill. I have
made that clear from the get-go. And I am not saying change
what it does in your area, but at least make it work for us.
Chairman Barton. Well, we--I will take that under
consideration.
Senator Schumer. Thank you.
Chairman Barton. But we want to see some movement our way,
too, from the Senate.
Mr. Hall. All right. I thank the chairman and thank the
Senator. Enjoyed the debate, but, you know, really the people
that we have to think about right now are the youngsters that
are going to have to go overseas and take some energy away from
someone when we don't have enough of it right here at home.
That is the real thing. And we all surely can get together when
it is that important.
I thank you, Senator, and if you need to go, we understand.
If you would stay, we would be honored to have you stay.
Senator Schumer. I am happy to stay.
Mr. Hall. The Chair recognizes Mr. Pickering for 3 minutes,
and 2 minutes is already gone.
Mr. Pickering. Mr. Chairman, thank you and thank you for
this hearing. I enjoyed the last colloquy between our
colleagues.
A couple of principles that I think should guide us in our
deliberations here: One, Congress should not favor one State
over another. This is a dispute between States. I hope that
they can reach a compromise and work through the different
issues. But it sets a very dangerous precedent that a large
State could dominate a small State. And being from a small
State, I think that is a very dangerous precedent to establish.
Two, the solution should be part of a comprehensive
solution to our Nation's energy policy. As Chairman Barton
said, there are two, possibly four, senators that would break
the filibuster in the Senate and allow all regions to benefit
from greater energy reliability, greater transmission
generation, distribution. It would have a mechanism that would
resolve disputes between States. So as you look at who is
responsible here, as far as solving this problem, that is
very--and I agree with the senator from New York.
It is a very significant issue for New York. It could play
a role in the reliability of electricity in New York. If there
is a blackout in New York, this could give a back-up that would
allow the reliability and the energy needs of his State to be
met.
But it is hard for me to imagine why, if that is the case,
that we could not find a way to move the energy bill through
the Senate. If it is that important, that significant, if it
has that much at stake, then I believe it should be part of a
solution to have legislation--comprehensive legislation--that
is good for my region, good for the northeast, good for the
Midwest and good for the west--done and passed in a fair way.
So with the stakes this high, I don't think that we should be
playing a game of political chicken and saying that the
responsibility is with everybody else but not with the New York
senators. It starts there; it ends there.
And when they are able to find a way to get the
legislation, the comprehensive energy bill that is good for
every region, passed through the Senate, then I think that they
have the credibility to be able to come and ask for a specific
issue that benefits their State.
With that said, I yield back my time.
Mr. Hall. Thank you.
At this time, we would recognize--brevity is wonderful
here. We recognize Congressman Green, the gentleman from Texas
for 3 minutes. And you will be rewarded if you don't use all 3.
Mr. Green. Thank you, Mr. Chairman. But knowing your
rewards, I will take my 3 minutes.
Mr. Hall. Your times is expired.
Mr. Green. Well, let me say something nice. Chairman Hall,
I want to thank you for holding this hearing because I think
this is an issue that talks about the need for a National
energy policy on a localized basis.
The Cross Sound Cable, I think, is so important, I am glad
to see our colleagues here and a former colleague who is now in
the Senate. The Cross Sound Cable is a classic example of a
project addressing both the basic and urgent energy supply
needs just as urgent as energy reliability needs.
The Long Island Power Authority tells us that, during the
peak summer demand, they are within 1 percent of capacity. As a
result, last August, the northeast, including Long Island, had
the equivalent of a heart attack. The Cross Sound Cable is the
bypass surgery that is needed to relieve the clogged arteries
of Long Island, New York.
And I commend our colleague Congressman Bishop for
recognizing the urgent need to turn on the Cross Sound Cable
immediately and permanently and look forward to his testimony.
With the stability of long-term contracts and redundancy of
interconnection, the increased flexibility provided by cable
will greatly benefit the entire region.
Energy Bill H.R. 6 contains a provision that is calling for
the final Federal siting authority transmission facilities
siting to the similar--to the authority exercised by FERC over
natural gas pipelines. H.R. 6 provides for such authority and
limits it to situations where the relevant State or regional
authorities are shown to have failed to act appropriately with
regard to facilities for areas found by the Secretary of Energy
to be transmission constrained.
I think the Cross Sound Cable is a classic case of why this
provision is necessary to address this problem in interstate
commerce today.
And again, Senator, I would hope the Senate would deal with
the energy bill. And of course, there are some other things you
and I disagree on, but I would like to see the full energy bill
pass because I think we need it for our country.
But this is an example of one of the local needs that has
to be done.
And again, thank you Mr. Chairman. I will look forward to
the testimony.
Mr. Hall. All right. The Chair recognizes the gentleman
from New York, Mr. Fossella.
Mr. Issa. The gentleman from California, Mr. Issa. But that
is all right. We are kind of look-alikes. Vito Issa.
Senator Schumer, you just got another ally up here on the
dais, and he is not even present. You know----
Mr. Hall. And his times expired for sure. And your time is
almost over.
Mr. Issa. My time has expired again. I will take Vito's
time.
You know, we use a lot of expressions here in the Congress.
You use even more in the Senate. You know, the expression that
you know Nero fiddled while Rome burned, to a certain extent,
speaks well here today. Both your State, New York and
California, the East and the West Coasts have experienced--and
Connecticut--have experienced very tight constraints on its
energy supplies. In the information age, in the modern era, if
we have people, but we don't have communication, which needs
energy, and don't have energy, which runs every machine that
makes our world go round, then in fact we are the Third World
again. And we are not very good at being the Third World. As a
matter of fact, we are real bad at it. And China and India and
other countries still are pretty good at it.
So we have to make sure that we have reliable energy,
reliable communication. And that is this committee's primary
responsibility as it falls in that way. And so, rather than
fiddling while Rome burns, I would ask you, Senator, even
though you and I see each other in the gym with great
regularity, to our mutual benefit, is there something between
the colloquy that you had with the chairman--in other words, as
a Californian, don't want to be paying for Midwest ethanol to
make corn farmers happy forever, even if we have no need for
them.
But I recognize that an abrupt halt in consumption, at a
time in which they have planned and it is part of the economy
also is unacceptable to many Members of this body and the one
on the other end of the Capitol. So let me ask you, would you
be willing to consider and take back to your body, in order to
move this issue and others, some form of a--once our States
have established an alternative to ethanol, which we have not
done, neither one of us has certified alternatives, but once we
have done it, to have a phaseout, a period, mutually
acceptable, sufficient to allow ethanol to--and the underlying
farmers not to abruptly lose it, perhaps even one that says
essentially, as consumption rises, we get phased out.
And at the same time, recognizing MTBE, which also has
polluted our watersheds--and we have multiple, but they all
have the same problem. And we are very concerned about it. Some
form of a fund in lieu of absolute liability so that at least
there would be predictability. And I believe that reasonable
parties on both sides could come to at least agreement to
agree, and then we would find the numbers.
Could you consider that? And I know this is an opening
statement, but I would appreciate a response.
Senator Schumer. Yeah. No, I think those are both excellent
questions. On the second, I have proposed that. But it has to
be a fund--and I know that Chairman Barton mentioned that the
leak fund has been doubled. It wouldn't even cover Suffolk
County's needs, let alone the whole country's. It is a very
small fund. It has to be much larger.
But I have proposed to some of my colleagues from Texas
that we do just what you said on MTBE. I don't care about the
liability stuff. I don't care about the ethos of lawsuits. I
just want to make sure that the homeowner--let me tell you a
little example. I went and visited Fort Montgomery. A lot of
retired people right across from Westpoint, they took their
whole savings, invested it in their little homes after they
served our country for 20 years. Now they have to drive a mile
to take a shower. They have to buy all bottled water, all
because a nearby gas company, the gasoline went into the water.
They didn't tell them. They didn't do anything. They are ready
to negotiate. So yes, a fund would do the job.
On ethanol, as you know, it is not just phasing out the use
of ethanol. What the bill does, it says you have to pay for
ethanol if you don't use it. Now, maybe there is no alternative
in California. We have an alternative in New York. I have
talked to Mr. O'Malley and others, the head of our largest
refiner----
Mr. Issa. We have an alternative. We just don't have it yet
approved.
Senator Schumer. We can do it. They can crack the oil
differently and meet the clean air standard, and they will do
that because it is still cheaper than ethanol. But then they
have to pay what is called an ethanol credit. It is the most
anti-free-market thing--I know you are an advocate of the free
market, as am I--that I have ever heard. And we know why it is
done. I can't sit there and let my New York drivers pay another
20 or 30 cents a gallon, which is what would happen, because
the Midwestern corn farmers and lots of these ethanol producers
want to do it.
So all we are asking on that one, give us a waiver. Not on
the Clean Air Standards; keep the air clean. But if, in certain
areas, it makes more sense to use another process, other than
ethanol or MTBEs for that matter, give us the waiver. That is
all. It is very simple again.
You need four more, you need five votes, because we have 56
now. It went down two. And every one of my northeast
colleagues--this is not an issue of party. This is issue of
maybe region. Your two senators have said the damage that would
occur if you imposed ethanol on California, Diane Feinstein has
led the charge. And so--and I know that Congressman Cox has
been out there as well. It is anti-free-market. It is unfair,
and I think it is unfair to ask my drivers to pay 20, 30 cents
a gallon to get some of the other good things, the reliability
stuff, in the energy bill.
And I would say that every one of you on this committee, if
your State were in that position, would do the exact same thing
we have done.
Mr. Hall. In order to be fair with the other participants,
I would ask that you make your statement, and then we will have
the questions and answers later.
The gentleman has finished his statement.
Mr. Issa. Yes, Mr. Chairman. Thank you.
Mr. Hall. All right. At this time, we recognize Mrs.
McCarthy, the gentlelady from Missouri for 3 minutes.
Ms. McCarthy. Mr. Chairman, I would like to waive that and
get to the panel.
I am just so glad to see each and every one of you. This is
a joy, so I will put my remarks in the record and let's give
you some more time.
Mr. Hall. I thank the gentlelady.
The gentleman from California, Mr. Cox.
Mr. Cox. Thank you, Mr. Chairman.
I will be very brief, particularly because we have a good
opportunity with our colleagues from both sides and from both
States, as well as FERC and DOE and representatives from New
York and Connecticut.
So rather than read you my opening statement and tell you
how I would solve this problem, I just want to suggest to those
who are going to give opening statements and testimony that, if
you would, I would like you to help me understand a couple of
things. First, given that the Connecticut Department of
Environmental Protection has agreed that the cable's operation
as it was installed would lead to no environmental harm or
hinder navigation in the harbor, why can't we, while methods
for reaching the required depth are devised, permit operation
of the cable?
Mr. Hall. The gentleman will have a chance to answer that
when we question the panel. You go ahead with your statement.
Mr. Cox. I am not asking questions to anybody. This is just
my statement.
Mr. Hall. Oh, I am sorry. Go ahead. I didn't mean to
interrupt.
Mr. Cox. Second, didn't we learn from the August 14, 2003,
northeast blackout that our electrical networks' vulnerability
and the general need for greater reliability should be
uppermost in our decisionmaking?
Third, why so soon after the biggest blackout in North
American history would anyone want to make it harder to get
power where it needs to go?
And last, as a Californian who has seen what our State's
decades-long failure to build new generating capacity has meant
for us and the problems that that has created, why is it that
the States of New York and Connecticut can seemingly agree on
only one silly point, which is that both would prefer to feed
the ever-growing needs of their populations by getting their
power from somewhere else, rather than building new generating
capacity of their own?
I thank you, Mr. Chairman.
Mr. Hall. I thank you.
The Chair recognizes the gentleman from Illinois, Mr.
Shimkus, for a fast 3 minutes.
Mr. Shimkus. It was going to be really fast, but based upon
some of the comments, Mr. Chairman, first of all, in the energy
bill, if you negligently handle and spill MTBE, there is a
liability and you are liable to be sued. This--the energy bill
provision is for faulty products status which we here--and you
are a Member--approved MTBE and the Clean Air Act. So let's put
that aside.
Second, energy security and ethanol--I am not going to
belabor it. I would just say that, right now, anywhere across
this country, 7 to 10 percent of fuel being used right now is
ethanol. Where are we going to get the additional 7 to 10
percent fuel, gasoline, that is being displaced by ethanol, and
at what cost? There is a benefit, and some States actually have
lower prices because of the ethanol additive right now.
Third, wholesale electricity is an interstate commerce
issue and is under the jurisdiction of our committee. It is
critical for market competition, lower prices and reliability
we have this provision in the national energy plan. We worked
real hard. I look forward to hearing, but it is very curious
that the northeast would now ask for special exemptions. We do
have legislation that would fix many of these problems. I yield
back my time.
Mr. Hall. All right. Thank the gentleman.
Congressman Israel or Bishop would you like to make an
opening statement.
Mr. Israel. Mr. Chairman, let me just thank you very much
for extending us this courtesy. And in deference to all of my
colleagues, I would like to submit my statement for the record.
[The prepared statement of Hon. Steve Israel follows:]
Prepared Statement of Hon. Steve Israel, a Representative in Congress
from the State of New York
The blackout that occurred across North America last August
reinforced my belief that the United States must pursue a national
energy policy that fosters greater energy security and reliability. The
24-mile Cross Sound Cable that runs from Shoreham, NY to New Haven, CT
is a microcosm of the challenges that lay ahead. It is unfortunate that
this issue is pitting New York and Connecticut against one another. The
blackout in August of 2003 illustrates the sense of urgency and fully
demonstrates the consequences of inaction, complacency and
parochialism. We must look past the rhetoric and seek a feasible
approach to bring greater energy security and reliability to the
Northeast region of the United States.
Since August 28, 2003, the Cross Sound Cable has provided 330
megawatts of power to Long Island and helped stabilize this fragile
power grid. It should be noted that this cable does not run one-way,
but has the potential to send power back to Connecticut as well. An
advantage of the Cross Sound Cable is that it has successfully smoothed
out system spikes in both New York and Connecticut. In fact, the Cross
Sound Cable provided voltage support nearly 100 times since August of
2003 with nearly 90 percent of requests for support coming from the New
England Region.
When operating on a full-time basis, the Cross Sound Cable responds
automatically to system disturbances and helps reduce congestion in
Connecticut. Since last August, the Cable was used 17 times for
stabilization due to lighting strikes, transformer failures,
transmission line faults and other events. It is important to note that
12 of the 17 responses were for disturbances to the grid in
Connecticut. Additionally, the Cross Sound Cable will enable
Connecticut to relieve internal congestion by circulating power through
Long Island and back to isolated parts of the state. ``Loop wheeling,''
which is only possible by using the Cross Sound Cable, enables power to
flow from Connecticut to Long Island through the Cross Sound Cable and
back to southwestern Connecticut via the existing 1385 Cable.
The Cross Sound Cable is not about one state siphoning power from
another. Rather, the Cable will be used to benefit energy customers on
both sides of the Long Island Sound. In fact, Long Island has already
shown a willingness to send power to Connecticut to help meet energy
demand. On July 2, 2002 during an extended heat wave, power was sent to
Norwalk, CT using the 1385 Cable that runs underneath the western
portion of the Long Island Sound. There is no reason to believe that
Connecticut will not also benefit from the Cross Sound Cable in this
manner.
I applauded the Secretary of Energy for taking previous steps to
ensure greater energy reliability by authorizing use of the Cross Sound
Cable on two separate occasions. I am concerned by the timing of the
most recent action to terminate use the Cross Sound Cable and I am
troubled by the belief that the Secretary must now wait for a ``true
emergency'' to permit its use again. Families and businesses in the
region deserve more than a wait-and-see approach to energy security. I
am not confident that a bureaucratic process can effectively respond to
the known uncertainties in the power grid. The real question is how
long will we have to wait for the Secretary of Energy to declare, for
the third year in a row, a power emergency that energizes the Cross
Sound Cable? The Old Farmer's Almanac is telling the region to ``expect
the worst heat wave in several years, with oppressive heat and
humidity'' in mid-August of this year. Spring temperatures are already
above seasonal averages and air conditioners are beginning to drain
from the power supply.
I believe we must act quickly to reinstate use of the Cross Sound
Cable to avoid unnecessary delay and reduce the vulnerability to the
region's energy grid. I sent a letter to Energy Secretary Spencer
Abraham on May 14, 2004 along with Congressman King, other members of
the Long Island Congressional Delegation, and all three New York
members on the House Committee on Energy and Commerce. We respectfully
requested that the Secretary of Energy rescind the termination of
Emergency Order No. 202-03-02 and allow permanent use of the Cross
Sound Cable. I eagerly await the Secretary's response and hope he will
quickly act to re-energize the Cross Sound Cable.
I have also introduced legislation with Congressman Tim Bishop that
would authorize use of the Cross Sound Cable. H.R. 4349 would
permanently reinstate Department of Energy Order No. 202-03-2 unless it
rescinded by an act of Congress. This legislation would provide all
necessary authority for the Cross Sound Cable to operate on a full time
basis. If the Secretary of Energy were unable to rescind the
termination of the Cross Sound Cable, and with comprehensive energy
legislation stalled, I would hope for quick action on H.R. 4349.
The Cross Sound Cable is part of a larger national struggle to
enforce reliability standards and foster greater energy stability
throughout all regions of the country. The New York economy can ill-
afford additional energy costs and unstable supply lines. I am
confident that we can work together to find a long-term solution to
this problem.
Mr. Hall. Fine. Without objection. Mr. Bishop?
Mr. Bishop. Mr. Chairman, I would take the same position. I
thank you so much for convening this hearing, but I will submit
my remarks for the record as well. Thank you.
Mr. Hall. All right.
I thank all of you and thank you for your brevity, and I
thank you for your answers, Senator. If you have to leave----
Senator Schumer. Thank you Mr. Chairman. I appreciate the
courtesy, and I enjoyed the dialog and hope we can come up with
a compromise on the energy bill. And I hope we can move forward
with the cable.
Mr. Hall. Go straight to work on the energy bill, and we
will rig the drawing for you in Texas.
[Additional statement submitted for the record follows:]
Prepared Statement of Hon. Edward J. Markey, a Representative in
Congress from the State of Massachusetts
Thank you, Mr. Chairman, for calling today's hearing.
While all of us are hopeful that New York and Connecticut resolve
their outstanding differences over the Cross Sound Cable, there is a
larger issue that this Subcommittee needs to address. On August 14,
2003 our nation experienced the worst blackout in our nation's history.
More than 60 thousand megawatts of power was cut off from those who
needed it, leaving 50 million consumers without electricity. Those
consumers--our constituents--want us to ensure that it never happens
again.
While I am certain that the Cross Sound Cable has importance to
those living in Eastern Connecticut and Long Island, New York, it is
far from clear whether its operation or non-operation of this cable
will have any major impact on the broader issue of the reliability of
our nation's electricity grid. In fact, in its May 7, 2004, order
terminating the requirement that the Cross-Sound Cable operate, the
Department of Energy (DOE) cited the April 2004 report of the U.S.-
Canada Power System Outage Task Force, which it stated did not
``identify any particular role that the Cross-Sound Cable would have
played in stopping the spread of the outage . . .''. Based on that
finding and other information, the Secretary of Energy found an
emergency no longer exists, that DOE's Order should be terminated. The
Secretary also announced that DOE would ``continue to monitor the
transmission and electric reliability situation in New England and New
York'' and that the Department might issue additional orders if
circumstances changed.
So, what do we need to do to address the potential of a repeat of
last year's blackouts?
First, I think that we should adopt H.R. 3004, which was introduced
by Representative Dingell last year, and which I have cosponsored,
which would make electricity reliability standards mandatory and
enforceable. Democratic members of the Committee have been pressing for
action on this legislation for several months, but the Republican
majority has chosen instead to link its passage to enactment of the
Bush-Cheney energy plan, which is filled with other extraneous special-
interest provisions for the oil, gas, and nuclear industries and which
would weaken our nation's environmental laws. In fact, even the Bush
Administration's own Department of Energy's Energy Information
Administration has admitted that enactment of the Republican energy
bill would have a negligible impact on energy production, consumption
or prices. I don't think we should allow H.R. 3004 to be held hostage
any longer. We should take it up now and pass it.
Second, with respect to the situation in New England and the
Northeast, it appears that while some transmission upgrades may be
needed, the Cross Sound Channel has little real relevance to the
reliability issues that are most pressing in our region. In this
regard, I note that in testimony submitted to the Subcommittee in
connection with today's hearing, ISO New England, the operator of New
England's wholesale transmission system, has stated that while it
supports operation of the Cross Sound Cable, the question of whether or
not the cable is in operation has virtually no effect on New England's
electricity transmission.
In particular, ISO New England's testimony states that:
``The Cross Sound Cable has no bearing on the electric
reliability situation in Southwest Connecticut. It is simply
not in the right location. The inadequate transmission system
limits transportation of power from the cable location to the
area of most need.''
ISO New England's testimony concludes that ``operation of the Cross
Sound Cable does not improve the daily reliability problems that exist
in Southwest Connecticut due to an extremely weak transmission
system.'' At the same time, the ISO notes that ``There may be, however,
emergency situations in which either New York or New England would
benefit by having an additional external interconnection from which to
receive emergency power.'' Instead of the Cross Sound Cable, the ISO
notes that ``the 1385 cable between Southwest Connecticut and Long
Island is a critical interconnection, and is in urgent need of repair''
and that ``When addressing the issue of interconnections between
Connecticut and Long Island, it is appropriate that the situation on
the 1385 cable also be addressed and resolved.'' I would urge FERC and
state regulators to address this matter quickly, as it appears to be
much more relevant to the issue of regional reliability than the Cross
Sound Cable.
Finally, I think that the Subcommittee needs to look very closely
and skeptically at some of the proposals that are now under
consideration at the FERC to provide transmission utilities with higher
``incentive rates'' for meeting their obligation to provide wholesale
transmission service, and to simultaneously provide generators with
higher ``locational installed capacity'' (or LICAP) payments to
subsidize uneconomic operations. While many of these proposals are
being couched in arguments about reliability, it is not at all clear to
me why such increased payments are justified and whether they bear any
reasonable relationship to ensuring system reliability. FERC has a duty
to help ensure that our electricity grid is reliable, but it also has a
responsibility to ensure that the rates charged to consumers are just
and reasonable. Why should FERC allow a monopoly transmission owner to
receive high ``incentive'' payments in excess of the guaranteed return
on equity that has historically been provided? And why should FERC
authorize a LICAP subsidy for generators? Are such steps really
necessary for grid reliability, or are they just a mechanism for
increasing utility and generation company shareholder profits? These
are questions that I think the Subcommittee needs to explore in much
greater detail.
Thanks again for calling today's hearing, Mr. Chairman. I look
forward to reviewing all of the testimony.
Mr. Hall. The Chair is very pleased to recognize Ms.
DeLauro. She is a long-time Member and a lady that works just
day and night, is the only time she works and is highly
respected. We are happy to recognize you for as much time as
you take.
STATEMENT OF HON. ROSA L. DELAURO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CONNECTICUT
Ms. DeLauro. Thank you so very much Mr. Chairman. It is a
delight to be here before your committee. I am hopeful that the
testimony of myself and my colleague from Connecticut, Mr.
Shays, will persuade you in a different direction.
I also want to welcome the Attorney General of the State of
Connecticut here this morning, Attorney General Blumenthal.
Delighted to have him here.
And to the ranking member, thank you for your time and
attention to this issue. If I can just make one----
Mr. Hall. Rosa, would you turn your mike on.
Ms. DeLauro. Here we go. Thank you again, Mr. Chairman.
And I guess I would just say that I miss you, so I will
just leave it at that.
I wanted--Mr. Pickering is gone, but I would like to pick--
there he is. I am sorry. I think you were exactly right when
you said that we shouldn't be favoring one State over another.
But let me refer you to Section 1441 of the energy bill, and
quite honestly, if you read that section, you will see that
that is what precisely this does in the energy bill because it
requires that the cable be activated in perpetuity. And that is
something I wanted to call to your attention, because I don't
think it is the role to take sides, one State against another.
And I commend you for that comment.
I am delighted to have this opportunity to share my
concerns regarding Cross Sound Cable, which stretches from New
Haven Harbor in New Haven, Connecticut, through the Federal
navigation channel and across the Long Island Sound to
Brookhaven, New York.
Mr. Chairman, to allow this transmission cable to operate
indefinitely, without complying with the conditions and the
requirements that were outlined in both the Federal permits and
in the State permits issued for the construction, installation
of the cable is to condone the kind of poor energy planning
that no one sitting here today wants.
In that sense, I also ask that you not penalize the
hundreds of commercial shipping and family fishing vessels that
use New Haven Harbor by intervening in this dispute between the
States and allowing this cable to operate.
Since its initial proposal in 2001 the Cross Sound Cable
has found steady and vocal opposition in Connecticut. And it is
just not among those elected officials who are often quoted in
the daily newspapers, but from communities of all background,
the harbor pilots who utilize New Haven Harbor's Federal
Navigation Channel, the fishing industry, which is a sizable
proportion of the revenue of the State of Connecticut,
environmental groups, yes, and concerned citizens. Groups,
quite honestly, which rarely share any kind of a common
interests. They all came together in an effort to stop the
installation of this electricity transmission line.
The proposal went through the regulatory process, both at
the State level and at the Federal level. It eventually
received the necessary permits for construction and for
installation. However, the permits were not issued without
consideration of the very, very valid economic, navigational
and environmental impacts that this project would have, both on
the Federal Navigation Channel and the Long Island Sound. In
both the Federal and the State permitting process, numerous
conditions were outlined by the regulatory bodies, and they
were accepted by Cross Sound Cable.
Among those conditions was the requirement that the cable
be buried 6 feet below the seabed, in accordance with the Army
Corps of Engineers requirements for harbor navigation. That
condition is not met in several places. If the city of New
Haven, which I represent, ever wanted to widen and deepen the
harbor, it would require the removal of the cable or the burial
of the cable to a further depth. New Haven is a port. And if we
wanted, in order to bring in additional cargo vessels and
increased economic activity around the port, this would be
extremely difficult. The burial cannot occur without drilling
through bedrock, which would have significantly adverse effect
on the shellfish industry.
Unfortunately, Cross-Sound Cable did not heed the warnings
of the harbor pilots and fishermen. These are folks who have
been in these waters for generations. They come from families
who have utilized the harbor, and they made it clear that it
would be impossible for Cross-Sound to install the cable at the
required depth throughout the channel using the proposed
techniques because they were going to come into contact with
that bedrock. It was known from the outset that this was going
to happen.
So instead of returning to the drawing board, what the
company decided to do was to move forward, and as predicted,
they ran into problems in several areas where they were unable
to meet the required depth conditions. It is my understanding
that in one of these problem areas, it is probable that the
company will not be able to meet the requirement without
significantly more damage to the channel.
Following the multi-state blackouts of August 2003, Energy
Secretary Abraham issued an emergency order that allowed the
cable to operate indefinitely. The basis of the decision was
that the Cross Sound Cable would act to stabilize the electric
grid. On May 7 of this year, Secretary Abraham issued another
order that called for the cable to cease operations. In issuing
the May 7 order, Secretary Abraham found that the emergency
conditions that required activation of the cable no longer
existed.
I applaud the secretary for recognizing the reality of
current conditions and acting appropriately. I just might add a
note that, by February, the blackout commission's interim
report laid the blame squarely on the shoulders of transmission
problems in Ohio.
No one wants--no one here wants to tie anyone's hands in
terms of an emergency. That would be wrong, and this is not
what we are talking about here. What we are talking about is a
law and about abrogating what was laid down.
In the last month, both the New York Independent System
Operator, the New England Independent System Operator, the two
organizations responsible for operating the region's electric
power grid have released reports on the electricity supplies
for the summer of 2004. Both reports express confidence that,
with normal summer weather, there will be an adequate supply of
electricity to meet demand. Even in the event that summer
weather conditions are unusually warm, there is no
justification for reactivating the cable.
Put simply, Cross-Sound Cable, LLC has a responsibility to
meet the conditions of both the Federal and the State permits.
And again, it is whether or not Cross-Sound Cable will be
allowed to break the law. Until it can do so without further
degradation of the New Haven Harbor or the Long Island Sound,
Cross-Sound Cable should not be able to financially benefit
from the operation of the cable. That is simply a matter of
good and responsible business practice.
The Secretary's August 17 order and efforts to legislate
the activation of this cable represent an unfortunate decision
to trump the regulatory measures taken by several other Federal
agencies, including the Army Corps of Engineers, the EPA, the
Fish and Wildlife Service. That order, H.R. 6 and the
legislation that has been introduced by members of the New York
delegation all represent a real assault on State and Federal
regulatory decisions. Failure to address the very real concerns
of Federal and State regulators would essentially allow the
company's bottom line, to supersede any and all regulatory
authorities.
I just state here that this is not good public policy. It
is a dangerous path for us to travel. I hope the committee
recognizes the need to remove this language from the energy
bill before it is reconsidered.
With that, I thank you so much for indulging the amount of
time, Mr. Chairman.
I appreciate all of your courtesy here today.
I thank the distinguished ranking member as well and the
committee for giving me this opportunity to speak to you. Thank
you.
[The prepared statement of Hon. Rosa L. DeLauro follows:]
Prepared Statement of Hon. Rosa L. DeLauro, a Representative in
Congress from the State of Connecticut
Mr. Chairman, distinguished colleagues, thank you for this
opportunity to share with you my concerns regarding the Cross Sound
Cable which stretches from New Haven Harbor in New Haven, Connecticut,
through the Federal Navigation Channel, and across the Long Island
Sound to Brookhaven, New York. I am grateful to have this opportunity.
Mr. Chairman, to allow this transmission cable to operate
indefinitely without complying with the conditions and requirements
outlined in both the federal and state permits issued for the
construction and installation of the cable is to condone the kind of
poor energy planning that no one here wants. In that sense, I also ask
that you not penalize the hundreds of commercial shipping and family
fishing vessels that use New Haven Harbor by intervening in this
dispute between the states and allowing this cable to operate.
Since its initial proposal in 2001, the Cross Sound Cable has found
steady and vocal opposition in Connecticut ' not just among those
elected officials who are often quoted in the daily newspapers, but
from communities of all backgrounds. Environmental groups, the fishing
industry, the harbor pilots who utilize New Haven Harbor's Federal
Navigation Channel, and concerned citizens ' groups which rarely share
common interests all came together in an effort to stop the
installation of this electric transmission line.
The proposal went through the regulatory process both at the state
and federal levels and eventually received the necessary permits for
construction and installation. However, these permits were not issued
without consideration of the valid environmental, economic, and
navigational impacts this project would have on both the Federal
Navigation Channel and the Long Island Sound.
In both the federal and state permitting process, numerous
conditions were outlined by regulatory bodies and accepted by Cross
Sound Cable. Among those conditions was the requirement that the cable
be buried, quote, ``no less than 6 feet below the seabed or to an
elevation of minus-48 feet mean lower low water, whichever is greater,
within the Federal Navigation Channel in New Haven Harbor . . .'' In
addition, under the permits, specific technology was accepted which was
to be used by the company to install the cable.
Unfortunately, Cross Sound Cable did not heed the warnings of
harbor pilots and fisherman--many of whom come from families who have
utilized the Harbor for generations--that it would be impossible for
them to install this cable at the required depths throughout the
Channel using these techniques because they would come into contact
with bedrock. Instead of returning to the proverbial drawing board, the
company chose to move forward and, as predicted, ran into problems in
several areas where they were unable to meet the required depth
conditions. It is my understanding that in one of these problem areas,
it is probable that the company will not be able to meet this
requirement without doing significantly more damage to the Channel.
Following the multi-state blackouts of August 2003, Energy
Secretary Spencer Abraham issued an emergency order that allowed the
cable to operate indefinitely. The basis of his decision was that the
Cross Sound Cable would act to stabilize the electric grid. On May 7th
of this year, Secretary Abraham issued another order that called for
the cable to cease operations. In issuing his May 7th order, Secretary
Abraham found that the emergency conditions that required activation of
the cable no longer existed. I applaud the Secretary for recognizing
the reality of current conditions and acting appropriately.
In the last month, both the New York Independent System Operator
(NYISO) and the New England Independent System Operator (ISO-NE)--the
two organizations responsible for operating the regions' electric power
grid--have released reports on electricity supplies for the summer of
2004. Both reports expressed confidence that, with normal summer
weather, there will be an adequate supply of electricity to meet
demands. Even in the event that summer weather conditions are unusually
warm, this is no justification for reactivating the cable.
Put simply, Cross Sound Cable, LLC has a responsibility to meet the
conditions of both the federal and state permits. Until it can do so
without further degradation of the New Haven Harbor or Long Island
Sound, Cross Sound Cable should not be able to financially benefit from
the operation of the cable. That is simply a matter of good,
responsible business practice.
The Secretary's August 17th order and efforts to legislate the
activation of this cable represent an unfortunate decision to trump the
regulatory measures taken by several other federal agencies, including
the Army Corps of Engineers, the EPA and the Fish and Wildlife Service.
That order, HR 6, and the legislation introduced by members of the New
York delegation, all represent a real assault on state and federal
regulatory decisions.
Failure to address the very real concerns of federal and state
regulators would essentially allow a company's bottom line to supercede
any and all regulatory authority. That is not good public policy. It is
a dangerous path to travel, and I hope the committee recognizes the
need to remove this language from the Energy Bill before it is
reconsidered.
With that, I would like to again thank the Chairman and the
distinguished ranking member for giving me this opportunity today.
Thank you.
Mr. Hall. We thank you very much.
At this time we recognize Peter King, the distinguished
Member from New York.
STATEMENT OF HON. PETER T. KING, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEW YORK
Mr. King. Thank you, Mr. Chairman, Ranking Member Boucher,
members of the committee, I certainly appreciate the
opportunity to be here today.
And Mr. Chairman, I was really almost tempted to rely on
the eloquence of your opening statement to make our case. But
since I am getting paid by my constituents, I better go ahead
and make the statement anyway, but it won't be as eloquent as
yours was.
I am really proud to testify here today on the importance
of maintaining the Cross Sound Cable. The cable is a vital tool
that provides energy security and reliability to the northeast
region of the country. I think it is important to emphasize the
concept of the region. Contrary to what we hear from
Connecticut officials, the Cross Sound Cable has and will
continue to benefit both Long Island and Connecticut. And the
environmental fears that the Connecticut officials are
expressing with the cable are just not supported by the facts.
In fact, they have even been rebutted by Connecticut's own
Department of Environmental Protection, as well as the New
England Office of the Army Corps of Engineers. And I do have
letters here, one from the New England District Corps of
Engineers, December 30, 2002, and also Connecticut's Department
of Environmental Protection. And Mr. Chairman, I would like to
ask unanimous consent to have these submitted into the record.
Mr. Hall. Without objection they are admitted.
Mr. King. Actually, I was going to read them until Mr.
Shays, in a typical bit of Connecticut pilfering, took them
from me.
No, seriously, I would just like to quote actually one
section, and then the entire letter is made part of the record.
But the Army Corps of Engineers said, ``The Corps of Engineers
in consultation with the National Marine Fishery Service has
determined there would be no undue short-term environmental
harm or interference with navigation with the cable in its
present location.'' I think it is important to keep that in
mind.
Also, as Senator Schumer pointed out, the dredging that is
currently taking place in the New Haven harbor is doing
significant more environmental damage than the cable would.
Now, it is essential we work together as a region to expand our
energy infrastructure and to increase supply. We are all too
aware of the economic insecurity consequences of last year's
blackout. Our region can't afford another power failure, and it
is imperative that Connecticut and New York find a way to
cooperate on this issue.
This is a high voltage direct current cable system so the
Cross Sound Cable allows for electricity to flow either way,
and it is has been vital to stabilizing the region's energy
grids since it was turned on. The electricity does not
automatically flow in one direction but rather is directed by
operators when a need is detected. In addition, it has
responded quickly and automatically 18 times to reduce
transmission system disturbances caused by lightening strikes,
transformer failures, transmission line faults and other events
and provided preventive voltage support over 100 times in
Connecticut and New York under the direction of system
operators.
In fact, it was prepared to send 200 megawatts of power to
Connecticut during a particularly cold spell last January. Even
the Connecticut Energy Advisory Board in its energy plan for
Connecticut submitted in March 2004 stated, ``The Board
believes that extending the existing moratorium is potentially
counterproductive. During the first moratorium, the task force
produced some helpful deliberative work pertinent to our
process and standards. However, the second moratorium has
restricted State authorities from negotiating acceptable
compromises for projects like the Cross Sound Cable and the
1385 cables in Norwalk.''
Mr. Chairman, the Cross Sound Cable provides energy
security and reliability to the region. But it is also
important to the region's economy. As we saw last August, much
of the northeast was shut down when the blackout occurred,
costing businesses millions of dollars. Neither New York nor
Connecticut can afford another power failure.
In addition, the Long Island Power Authority and its top
man, Richard Kessel, will be testifying in a subsequent panel.
They have estimated that Connecticut's failure and refusal to
act could lead to $38 million in additional costs this year,
which likely would be passed along to Long Island rate-payers.
Additional costs will stem from State power authorities
mandating utilities be able to sustain the capability to
generate a certain amount of electricity. With summer
temperatures approaching, now is not the time to reduce the
supply.
In conclusion, Mr. Chairman, I want to thank you for
inviting me to testify on this issue. I really want to thank
this subcommittee for its leadership in improving our Nation's
energy policy and increasing reliability in the northeast. I
was particularly pleased that there were negotiations last
year, even though Ms. DeLauro was opposed to it, that a
provision was included that would have made permanent Secretary
Abraham's decision to turn on the Cross Sound Cable.
I believe it has to be made permanent. It is essential for
New York. It is essential for the Northeast region.
I really know that the subcommittee will go forward with
due deliberation. I thank you for this opportunity here this
morning, Mr. Chairman. Also I ask for permission to include my
full statement in the record. In deference to your desire of
expedition, I eliminated many eloquent remarks, but people who
want to read the record can see them later on. Thank you, Mr.
Chairman.
[The prepared statement of Hon. Peter King and the letter
follow:]
Prepared Statement of Hon. Peter King, a Representative in Congress
from the State of New York
Chairman Hall, Ranking Member Boucher, Members of the Subcommittee
on Energy & Air Quality: Thank you very much for the opportunity to
testify at today's hearing and express my strong support for the Cross
Sound Cable. The cable is a vital tool that provides energy security
and reliability to the Northeast region of the country. Contrary to
what you may hear from Connecticut officials, the Cross Sound Cable has
and will continue to benefit both Long Island and Connecticut. In
addition, the environmental fears that some Connecticut officials have
expressed with the cable are just not supported by the facts. They have
even been rebutted by the Commissioner of the Connecticut Department of
Environmental Protection, Mr. Arthur J. Rocque, as well as the New
England office of the Army Corps of Engineers and various independent
interest groups. At this time, I would like to ask for unanimous
consent for the purpose of submitting these documents.
Additionally, private specialists in marine and freshwater site
surveys, such as Ocean Surveys Inc., has stated that the cable has had
only ``minor/short term effects on bottom dwelling organisms located in
the Sound'' and the New England District of the Army Corps of Engineers
asserts ``there will be no undue short-term environmental harm or
interference with navigation with the cable in its present location
until full burial depth can be achieved.'' Finally, according to
Commissioner Rocque, the dredging that is currently taking place in New
Haven Harbor is doing significantly more environmental damage to the
area than the cable would do.
It is essential that we work together as a region to expand our
energy infrastructure and increase supply. We are all too aware of the
economic and security consequences of the August 13th blackout. Our
region cannot afford another power failure and so it is imperative that
Connecticut and New York cooperate on issues such as the Cross Sound
Cable.
The Cross Sound Cable is essential to increasing the supply of
electricity to Long Island and preventing future power failures.
According to the Cross Sound Cable Company, it has ``operated at 98%
availability since September 2003 and transmitted an average of 200
megawatts per day to Long Island and nearly 500,000 megawatt-hours of
power to Long Island.'' Since it is a high voltage direct current cable
system, the Cross Sound Cable can allow for electricity to flow either
way and has been vital to stabilizing the region's energy grid since it
was turned on. The electricity does not automatically flow in one
direction but rather is directed by operators when a need is detected.
In addition, it has ``responded quickly and automatically 18 times to
reduce transmission system disturbances caused by lightning strikes,
transformer failures, transmission line faults and other events and
provided preventive voltage support over 100 times to Connecticut and
New York under the direction of system operators.'' In fact, it was
prepared to send 200 megawatts of power to Connecticut during a
particularly cold spell last January. The operation of the Cross Sound
Cable not only increases reliability in the region, but it also
decreases Connecticut's reliance on its pollutant emitting power plants
[New Haven].
Even the Connecticut Energy Advisory Board in its Energy Plan for
Connecticut submitted in March 2004 states, ``[the Board] believes that
extending the existing moratorium (originally established under Public
Act 02-95) is potentially counterproductive. During the first
moratorium, the task force produced some helpful, deliberative work
pertinent to both process and standards. However, the second moratorium
has restricted state authorities from negotiating acceptable
compromises for projects like Cross Sound Cable and the `1385' cables
in Norwalk.''
The Cross Sound Cable provides energy security and reliability to
the region, but is also important to the region's economy. As we saw on
August 13th, much of the northeast was shut down when the blackout
occurred costing businesses millions of dollars. Neither New York nor
Connecticut can afford another power failure.
In addition, the Long Island Power Authority (LIPA) has estimated
that Connecticut's failure and refusal to act could lead to $38 million
in additional costs this year, which likely would be passed along to
Long Island ratepayers. Additional costs will stem from the state power
authorities mandating that utilities be able to sustain the capability
to generate a certain amount of electricity. With summer temperatures
approaching, now is not the time to reduce the supply.
In conclusion, I want to thank the Chairman for inviting me to
testify on this critical issue and I would like to thank the
Subcommittee for its leadership on improving our nation's energy policy
and increasing reliability in the Northeast. I was particularly glad to
see that during negotiations last year on the energy conference report
(H.R. 6), conferees included a provision that would make permanent
Secretary Abraham's decision to turn on the Cross Sound Cable. I look
forward to continuing to work with you and the Subcommittee on these
very important energy issues during the remainder of this Congress.
______
State of Connecticut
Department of Environmental Protection
June 13, 2002
The Honorable Richard Blumenthal
Attorney General of the State of Connecticut
55 Elm Street
P.O. Box 120
Hartford, CT 06141-0120
Dear Mr. Attorney General: Thank you for your letter of June 5,
2002, concerning the Department of Environmental Protection's permit
number 200102720-MG issued to the Cross Sound Cable Company. While I
appreciate your advice and your viewpoint, I believe that your
interpretation of the permit conditions for this permit and
recommendations regarding the project are inconsistent with past
practices of the Department.
While it is apparently true that the cable is not presently
installed at all points to the depth specified in the permit, Cross
Sound has currently stopped work in compliance with the seasonal
restrictions in the permit. As you know, these restrictions were
imposed by DEP in order to protect spawning shellfish and anadromous
fish. No extension or wavier of these restrictions has been requested;
it is unlikely that it would be granted under present habitat
conditions even if requested. The permit, however, provides in its
terms and conditions for a three-year construction time-period, a
standard practice on such permits. Therefore, Cross Sound is clearly
authorized to resume their construction activities insofar as they are
permitted when the seasonal restrictions expire without any additional
authorization from this Department. Should Cross Sound elect to seek
modifications of their construction activities under this permit, such
modifications would be evaluated to determine whether or not they
constitute minor modification. Under most circumstances and consistent
with longstanding agency policy, such modifications would not be deemed
either a new application or a new proceeding.
I would be remiss if I did not note my disappointment in your
characterization of the impacts associated with both the installation
of the cable and the failure to attain greater depths in part of the
federal channel as serious, critical and devastating environmental
impacts. At no time has any reviewing permit analyst with expertise in
marine projects, at either the state or federal level, raised concerns
in terms approaching these. Given my own background in marine
environments in general and Long Island Sound in particular, I must
confess that I agree with the analysts. From an environmental
perspective this cable project pales in comparison to even maintenance
dredging of the federal navigational channel in New Haven Harbor.
Moreover, in terms of direct impact on shellfish beds in particular,
neither the cable project nor maintenance dredging begin to compare
with the impacts associated with deepening the federal navigation
channel. I point this out not to express concern over the
permittability of New Haven Harbor dredging projects for which I know
you have expressed support; they have been permitted in the past.
Rather, I point this out over concern that published rhetoric has
eclipsed facts on this project, at least from an environmental impact
standpoint.
Without a specific request before me, I think it unwise for me to
speculate as to what our conclusion will be on the future options
available for the Cross Sound Project. Rest assured, however, that this
Department has taken the Cross Sound Cable project very seriously and
would have done so even if it were not controversial. We will endeavor
to make sure that the applicant completes the project to the best of
their ability in accordance with the terms and conditions of the issued
permit. Should they do otherwise, we will pursue the appropriate
remedy. If that remedy includes the need to enforce any of the terms
and conditions of the permit, we will, as we most always do, turn to
your staff for assistance.
If you have any questions or any additional comments you would like
to make, I would be pleased to receive them.
Sincerely,
Arthur J. Roque, Jr.
Commissioner
cc: Jane Stahl, Deputy Commissioner
Charlie Evans-DEP
______
Department of the Army
New England District, Corps of Engineers
December 30, 2002
Regulatory Division
CENAE-R-2000-01773
Cross Sound Cable Company, LLC
Attn: Mr. James P. Nash
110 Turnpike Road, Suite 300
Westborough, MA 01581
Dear Mr. Nash: This is in response to your letter of December 23,
2002 regarding the status of the on going effort to reinstall the cable
in those areas where the -48' mean lower low water (mllw) depth as
required by your Department of the Army permit was not achieved due to
physical constraints.
We appreciate your cooperation in responding to our requests for
information and moving towards meeting the required depth. We
understand you are simultaneously working with Connecticut Department
of Environmental Protection, Office of Long Island Sound Programs
regarding state approval for the additional reinstallation work as it
relates to issues associated with the state moratorium against
processing applications for authorizations for cables crossing Long
Island Sound until June, 2003.
The Corps of Engineers, in consultation with National Marine
Fisheries Service has determined that there will be no undue short-term
environmental harm or interference with navigation with the cable in
its present location until full burial depth can be achieved. Since you
are working in good faith to reach the required burial depth, the Corps
of Engineers has no objections to you operating the cable at this time.
However, we will not be relaxing the requirement to bury the cable
to -48' mllw and we look forward to working with you and Connecticut
Department of Environmental Protection to insure full compliance with
the terms and conditions of your permit is achieved as soon as
possible.
Sincerely,
Thomas L. Koning, Colonel, Corps of Engineers
District Engineer
Mr. Hall. I thank the gentleman.
Your offer to Mr. Shays, your letter reminded me of Henry
Wade, former district attorney of Dallas, made a speech and
sent his brother a copy of it, and his brother called him and
said, good speech, Henry, who wrote it for you? He wrote him
back and said, I am glad you enjoyed it. Who read it to you?
You weren't about to read to Mr. Shays, were you?
The Chair recognizes the gentleman.
STATEMENT OF HON. CHRISTOPHER SHAYS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CONNECTICUT
Mr. Shays. Thank you, Mr. Chairman. It is nice to see you
in that position as Chair in spite of your misguided statement.
I want to say that Mr. Schumer, like a good attorney, could
argue on both sides of the case, and I think he would probably
prefer to argue on the other side. The fact is we can all agree
there is a clear need for electricity to go back and forth
between States to protect regional energy security and ensure
there is sufficient generated energy in ample supply to meet
present and future demands. We can all agree on that. We may
ultimately disagree about the value of environmental
protections and review processes in meeting these goals, but we
shouldn't.
In the course of setting national energy policy, important
environmental concerns cannot be dismissed as some want to.
While we must make sure we have plans in place to provide
Americans uninterrupted service, we also have a responsibility
to future generations to ensure due diligence is done to
prevent unnecessary and unavoidable environmental harms and
follow due processes established to ensure we adequately
consider environmental objections.
Back in 2002, the Connecticut Department of Environmental
Protection and the Army Corps of Engineers published minimum
environmental requirements for the cable. These were minimum
requirements. These included a stipulation for the depth at
which cable should be buried. The cable does not comply with
these requirements at several points along its course. Its
failure to meet this requirement, and its activation despite
that significant shortcoming, has been a serious source of
concern for Connecticut. It should be for the region and for
the entire country.
The fact is the cable does not comply with the State of
Connecticut's construction permit that was designed in
consultation with the Army Corps of Engineers. It does not
comply with the minimum environmental standards established to
protect this precious estuary. Its permanent activation could
have consequences for Connecticut's ecosystem, oyster industry,
power supply and marine business. After ordering the cable
indefinitely activated on August 28, Secretary Abraham shut
down the Cross-Sound Cable on May 7, an action we are grateful
for.
Now, we have had plenty of disagreements between our
States, but we have worked over time to clean up Long Island
Sound. And when some talk about dredging, we have, in fact, the
strongest dredging requirements, in consultation with our
colleagues on both sides of the aisle, of any estuary in the
entire country. We are the only estuary that comes under ocean-
dumping laws. If it is toxic material, it is not going to be
allowed to be the material placed in the sites that have been
allocated. So I think that is a red herring.
The bottom line is this: We have a permit process. When
they comply with the permit process, then they should be
allowed to activate this cable, and until then, they shouldn't.
[The prepared statement of Hon. Christopher Shays follows:]
Prepared Statement of Hon. Christopher Shays, a Representative in
Congress from the State of Connecticut
Mr. Chairman and members of the Committee, thank you for allowing
me to testify today about concerns we have regarding the activation of
the Cross Sound Cable, which connects the electric transmission grids
of New England and Long Island and transfers power in both directions.
We can all agree there is a clear need for electricity to go back
and forth between states to protect regional energy security and ensure
there is efficiently-generated energy in ample supply to meet demands.
We may ultimately disagree about the value of environmental protections
and review processes in meeting those goals.
In the course of setting national energy policy, important
environmental concerns are too often dismissed.
While we must make sure we have plans in place to provide Americans
uninterrupted service, we have a responsibility to future generations
to also ensure due diligence is done to prevent unnecessary
environmental harms and to follow processes established to ensure we
adequately consider environmental objections.
Back in 2002, the Connecticut Department of Environmental
Protection and the Army Corps of Engineers published minimum
environmental requirements for the Cable. These included stipulations
for the depth at which the Cable should be buried that it does not meet
at several points along its course. Its failure to meet those
requirements, and its activation despite that significant shortcoming,
has been a serious source of concern for Connecticut.
The fact is the Cable does not comply with the State of
Connecticut's construction permit. It doesn't even comply with minimum
environmental standards established to protect this precious estuary.
And its permanent activation could have consequences for Connecticut's
ecosystem, oyster industry, power supply and maritime business.
After ordering it indefinitely activated on August 28, Secretary
Abraham shut down the Cross Sound Cable on May 7, an action we are
grateful for.
Nonetheless, it is still important to recognize that the method by
which he had activated the Cable in the first place overrode the
State's legally constituted authority to regulate its construction in a
manner that protects this important natural resource, and circumvented
important review processes in place to ensure the environmental
integrity of the project.
Secretary Abraham's decision to activate the Cable and the effort
to codify that decision in the Energy Policy Act was simply the wrong
way to proceed.
These actions, which followed the August 14 blackout, came despite
Connecticut's vigorous opposition and the North American Electric
Reliability Council's public assurances that the electric grid in the
Northeast had returned to normal operation.
There is a right way and a wrong way for the system to work. State
laws need to be respected and when they are overruled, there should be
a process that's fair for ensuring their concerns are addressed. In
this case, we have a system in place for doing exactly that, but the
way in which the Cable was activated bypassed the process and was
therefore objectionable.
Mr. Chairman, the bottom line for me is, when dealing with a
project of this magnitude, there is a process for ensuring
environmental fitness, which in this case, was not followed.
It is clear we must take action to maximize energy security, but
environmental review need and must not be compromised in the process.
Mr. Hall. Thank you.
Where you and Ms. DeLauro won't be too despondent, nor Mr.
King too jubilant, when I read my statement to you, like you, I
heard it for the first time. The Chairman is supposed to be
neutral. I am trying to do that.
At this time I recognize the gentleman from Virginia for
any questions he may have.
Mr. Boucher. I don't have any questions, Mr. Chairman.
Mr. Hall. The Chair goes to Mr. Pickering, the gentleman
from Mississippi.
Mr. Pickering. My question is what are the current ongoing
discussions between the two States? What would be the process
if the energy bill, which does have a dispute mechanism in it
for how siting is done, work paths, then that would give it a
process. What concerns me now is the current process. And I
take the point of Congresswoman DeLauro, well, how do we not
favor one State over the other, but create a fair process that
resolves disputes?
This is an important issue not only for New York and
Connecticut, but for all States as we look forward in the
future, as we create new generation, hopefully, the need for
new transition lines. And then the siting of those lines,
whether it is in the Southeast or in the Northeast, are very
important. What is the current process? I know that we are
currently under appeal, Connecticut. Are there ongoing
discussions between the two States to resolve this dispute? If
so, what are they?
Mr. Shays. I will be happy to jump in, but I would say that
when you have Attorney Blumenthal address you, I think he can
give you more of the specifics.
There is the general view in Connecticut that this cable
will be done and must be done under the permitting process. And
so we don't want to concede that, having built it, that
possession is nine-tenths of the law. And so the dialog, in our
judgment, needs to conform to the permitting process, and let's
get the job done.
Ms. DeLauro. Let me--I concur with my colleague because I
think the specifics of the legal process are left to the
attorney general, and he will be speaking with you. But this is
not an issue of whether or not the cable can be a reliable
provider of electricity. The question is whether we want to
circumvent State and the Federal regulatory process, and risk
serious commercial damage and environmental damage to the port
of New Haven in this process. That is what this is about.
And you know, if there had been the decision, to move
elsewhere or to heed the word of people who understood and knew
the Sound and know about the areas where there is bedrock, this
would just not be a problem. And to abrogate the law, as I
said, for the bottom line of the company does not seem to be
the direction that we ought to go in. Thank you.
Mr. King. Congressman Pickering, I think, indicates there
was not really much dialog going on between the two States, I
don't believe. However, Richard Kessel, who is the chairman of
the Long Island Power Authority, will be intimately involved in
whatever talks are going on. He lives with this issue day in
and day out. He will be much better qualified than I am to tell
you what the nuances and particulars are. My own feeling is
there is not much going on constructively between the States.
Mr. Pickering. Congressman King, earlier Senator Schumer
indicated that he would support the establishment of a fund
that would clean up MTBE. As Congressman Shimkus mentioned,
there are provisions in the energy bill now saying that if you
are negligent, or if you were at fault under normal standards,
not under the faulty product which was mandated by the
government, but by other standards of litigation, that there is
the right to sue.
If we were to work out a compromise on a funding mechanism,
and the reality of the political situation--I don't think
Speaker Hastert or Leader Daschle would support a waiver on
ethanol, that is just political reality, but there is a way
that we can solve the MTBE question--would it be in the best
interest of the Northeast if that compromise were reached to
all come together, Republican and Democrat, to support the
passage of a comprehensive energy policy?
Mr. King. My concern with the energy bill was not the
ethanol. I am not pleased with it, but I can live with it. I
understand that if you are talking about a national bill, there
has to be regional accommodations made, and I understand that.
My concern is with the MTBE, especially as it affected
lawsuits that were already in place. As Senator Schumer said, I
live in Long Island. It is a sole-source aquifer. There are
many water districts that have really been damaged severely,
and the property tax impact, you have people's taxes going up
20, 25 percent as a result of this. So my concern was on the
retroactive application of the law. But, again, if we can start
talking about a fund and have constructive talks, I would
certainly support the bill.
Mr. Pickering. I would just encourage you to encourage the
Senators from New York to work with us on that. I think that
there is a way that we could resolve that with the fund. I do
have--I realize the problem with retroactively rescinding the
right to sue, but at the same time it was government-mandated,
and we need to now go forward, find a solution that actually
cleans it up, cleans the water, helps the people that are
affected, as Senator Schumer described, but, more importantly,
get a comprehensive energy bill.
I think your leadership in New York of publicly saying so
hopefully would help the two Senators as they perform their
duties in the Senate. Thank you.
Mr. Hall. I thank the gentleman.
We don't normally question Members. You can volunteer to
answer if you want to, but I understand how busy each of you
are and other commitments you have. We would excuse you at this
time if you want to be excused. We would leave open for
everyone here the opportunity to send written questions to you
or catch you in the hall or in between votes or something to
talk to you. But we really thank you for your time.
Mr. Shays. Could I make a short comment, sir? No one has
asked the opinion of--my opinion about the energy bill, but I
shudder every time I hear the word ``comprehensive,'' because
for me it would be comprehensive if it had much more emphasis
on economy of energy, increasing CAFE standards. I think you
would have found a whole group of people supportive of the bill
if we had seen SUVs, minivans and trucks get more of the kind
of mileage that you see in automobiles. Then I think the word
``comprehensive'' could have been attached to this bill in a
very fundamental way.
Mr. Hall. I think Mr. Dingell might take a dim view of
that.
Mr. Shays. I know he would, but that is part of politics.
Mr. Hall. But I think it is good that you bring it up,
because we may have the makings of an energy bill if we all get
together and give a little.
Mr. Shays. If you had that, boy, I would fight for that.
Mr. Hall. You would be a real hero if you could get us the
energy bill.
Mr. King. I said at the beginning this was a bipartisan
effort from New York, and I neglected to thank Congressman
Israel and Congressman Bishop for the great job they have done
along with Governor Pataki. This is bipartisan. They have done
wonderful work.
Mr. Hall. Thank you.
Mr. Cox had three questions. Did you all want to answer any
of these?
Mr. Shays. Could you quickly just review them very quickly,
because I basically concur that you have to have transmission
from one State to another. I took the position that this
ultimately needed to happen. You need this cable, but do it
according to the permitting process.
So I don't want people to think that my objection to this
was based on not doing it. Sometimes we will give them energy;
sometimes they will give us energy. You need that cross-
connection. The problem we had was we think that Cross-Sound
Cable attempted to build this cable knowing they couldn't
provide--live up to the permit, but then having built it,
possession would be nine-tenths of the law. They thought they
could just ram it through and ignore the permit process, which
was our problem.
Mr. Hall. Mr. King.
Mr. King. If I could reply to that. My understanding is
that Cross-Sound Cable does want to go back in and rectify it,
but under the moratorium from Connecticut they are not allowed
to.
Mr. Hall. It kind of leaves them in a dilemma.
I think Mr. Radanovich wants to ask a question.
Mr. Shays. We just don't want it operated, though, until
they meet the permit process. We don't want the process for
them to be operating it while this is in dispute.
Ms. DeLauro. I think it is important to note that Cross-
Sound has been required to perform an environmental study of
the effects of the cable operation. The company must repair the
shelf beds adversely impacted by the installation of the cable.
The company agreed to take these steps as a condition of
receiving the permits, but has yet to complete any of the
action. The permits were issued at specific depths and specific
requirements, and the company has refused to do that. They just
moved forward without doing it, so that they agree to do some
things, and then they don't do it.
And a final comment, Mr. Chairman. I would like to say that
we need to deal with the energy problem. Long Island has a
power generation deficit. It will remain an electricity
supporter for the foreseeable future. It is difficult to
foresee a situation in which Long Island could become a very
meaningful exporter to the State of Connecticut, in my view. So
I don't believe that the small benefit that Connecticut does
receive, and we do get a very small benefit, that the very
serious commercial risks that the cable presents and the
environmental risks that the cable presents to our community
are not worth it.
Mr. Hall. Have each of you had an opportunity to express
yourself? If so, thank you for your time. You have been great
all three of you.
Mr. Radanovich, I am sorry. Mr. Radanovich has asked to
be----
Mr. Radanovich. If I could have just a brief clarification,
Rosa. You may be able to answer the question. I know this
sounds like environmentally this is caught up in the energy
bill, but what environmental hazards would exist in the laying
of the cable across the sound?
Ms. DeLauro. I would just say to you that the way that this
was permitted by the Army Corps of Engineers, the State and the
Federal permits, there were conditions that were outlined by
these bodies. The requirement that the cable be buried 6 feet
below the seabed in accordance with the Corps' requirements for
harbor navigation, the condition has not been met in several
places. So that is--so that is in effect.
So what happens if we bypass that, in taking the position
here over one State or another, is we are just going to
abrogate what was the law. They agreed to these conditions. And
they were also told by--as I said to the Chairman earlier, that
there are people who are generational, the fisherman, the
harbor pilots, who have come together, and the
environmentalists and others, groups that never come together
around this, told them they were going to have difficulty. They
refused to go back and look at a different way in which to deal
with it. They laid it out, and, in fact, we hit bedrock there.
So they are not meeting the permitting requirements. That is
the problem that I have.
Mr. Radanovich. The main issue is the depth of the cable.
Ms. DeLauro. That is my view.
Mr. King. That only includes 700 feet out of 24 miles. They
want to go back in; they want to correct it. This, by the way,
is a survey report which was completed just several months ago,
which I assume we can make part of the record.
[The report follows:]
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Mr. King. Again, the conclusion was that there has been
minimal impact to the living organisms in the Long Island Sound
channel.
Mr. Radanovich. One more brief question. How deep is the
water there where the cable doesn't meet the depth requirement?
Do you have any idea?
Ms. DeLauro. It was supposed to go down to 48 feet, leaving
a 6-foot safety margin. If we wanted to and--the point I wanted
to make was that if New Haven--and New Haven is a port,
understand that New Haven is a port. It is not the port of
Seattle, and it is not the port--but in terms of business and
industry, it is second to Boston in the region. So if New Haven
ever wanted to go deeper and dredge, we would have to deal with
the cable and removing the cable, et cetera, and significantly
more damage to the Long Island Sound and to the port of New
Haven.
Mr. King. Again, I would say this survey will show that
there is minimal impact at all on commercial navigation.
Mr. Hall. In fairness to Mr. Rogers and Mr. Otter, do you
all have any brief questions that you can't submit for the
record?
Mr. Shimkus. I don't, Mr. Chairman, thank you.
Ms. DeLauro. Thank you, Mr. Chairman.
Mr. Hall. We thank you very much. We are ready for the
second panel.
Mr. Hall. All right. We have a very distinguished group
here. We first have the honorable Patrick Wood, Chairman of
FERC, longtime successful, generous giver to energy problems of
his own State and now to his Nation. We have Honorable Lee
Otis, general counsel for the Department of Energy; Richard
Blumenthal, attorney general, State of Connecticut; William
Museler, president and CEO of New York ISO; Jeff Donahue, who
built the project of Cross-Sound Cable Company; Richard Kessel,
chairman and CEO of Long Island Power Authority. A very
distinguished panel.
At this time we recognize Mr. Wood for 5 minutes. If you
can, sir, do it in 5 minutes. We won't hold you to 5 minutes.
If you can do it in 4, it will be acceptable.
Mr. Wood. I think I will try to beat that.
Mr. Hall. Yeah, and 2 minutes of those are gone.
STATEMENTS OF HON. PATRICK WOOD, III, CHAIRMAN, FEDERAL ENERGY
REGULATORY COMMISSION; LEE OTIS, GENERAL COUNSEL, U.S.
DEPARTMENT OF ENERGY; RICHARD BLUMENTHAL, ATTORNEY GENERAL,
STATE OF CONNECTICUT; WILLIAM J. MUSELER, PRESIDENT AND CEO,
NEW YORK ISO; JEFFREY A. DONAHUE, CHAIRMAN AND CEO, CROSS-SOUND
CABLE COMPANY, LLC; AND RICHARD KESSEL, CHAIRMAN AND CEO, LONG
ISLAND POWER AUTHORITY
Mr. Wood. Considering the depth of expertise on the panel,
I would like to take a little bit more of a policy angle here,
because I do think that is what you all ask us at the
Commission to do, is to look at these things from a broader
angle.
I have heard Mr. Pickering's concerns about State versus
State issues, and, quite frankly, a number of those in a number
of different arenas come to our Commission, whether they are on
gas issues or power issues or hydroelectric issues. We are
often the arbiter, the Federal arbiter, when States can't work
things out. So we do that for a job. It is not always the most
enjoyable, but it tends to work.
The statutes that govern this particular issue are a bit
different than the typical ones we deal with that have a much
clearer line of authority for our Commission. There have been
amendments to the Act in 1992, the most recent energy bill, to
allow certain types of interconnections. It is different than
the authority under which the Secretary of Energy used to
energize on an emergency basis this cable. But there are new
authorities, one of which is the subject of a pending
complaint, with a parallel line across the Long Island Sound
between Connecticut and Long Island, which there hasn't been
much discussion about today because it is pending before our
Commission. I am going to avoid going into it, but some of the
other witnesses here today may do that with regard to what are
called the 1385 cables.
The New York region, from an electrical and from an energy
point of view, and greater New York I am including northern New
Jersey, Long Island and southwestern Connecticut, in addition
to the city, is the largest, if not the largest, load center in
the entire country. It spreads over three large grid operators,
the New York ISO, ISO New England and the PJM interconnection.
And the infrastructure needs of that area are so
significant, they have, quite frankly, dominated a lot on which
we have focused. The harder cases before our Commission on both
gas pipeline infrastructure and on electricity deal with about
a 70-mile radius from downtown New York, and for that reason we
at the Commission are very interested in seeing this problem
that is before the committee today be resolved.
I think certainly the encouraging signs we heard from the
prior panel might lead us to think that this could indeed be
addressed between and among the States. We hope that is the
case. Nevertheless, there are Federal authority issues that may
well be drawn into play here.
As just a final thought I would like to say that this is an
issue that, unlike the natural gas pipeline issue, has an
interesting interplay between State and Federal authorities.
The gas pipeline side of the Commission has relatively clear
authority to do not only the siting and environmental reviews
for interstate gas pipelines, but also does the permitting of
the rates, terms, and conditions of the pipes.
On the electricity side, by contrast, we can do the rates,
terms and conditions of the line, as we did in the year 2000
for this current project, but we do not have the front seat on
the environmental and siting issues. That rests, as we have
heard, with the States. There is not under current law a
Federal court of appeal for that other than the regular State
and Federal court process from each of the individual
permitting agencies.
The siting provisions in the proposed energy bill would
change this and would put the Commission, as it has with other
issues, as an arbiter where States do not agree or where
Federal and broader regional interests are not addressed. I
want to flag that again for the attention of the committee and
observe that that is in the energy bill. I think it would
address a number of these type issues should they pop up in the
future.
Thank you, and look forward to any questions, Mr. Chairman.
[The prepared statement of Hon. Patrick Wood, III,
follows:]
Prepared Statement of Pat Wood, III, Chairman, Federal Energy
Regulatory Commission
I. INTRODUCTION AND SUMMARY
Thank you for the opportunity to testify on the operation of the
Cross-Sound Cable (CSC or Cable). The CSC is an underwater direct
current 330 megawatt cable system under Long Island Sound. The CSC
connects the New England Power Pool (NEPOOL) regional transmission
system in Connecticut to the New York Independent Transmission System
Operator (NYISO) transmission system on Long Island, New York. Pursuant
to orders by the U.S. Secretary of Energy, the CSC has been used at
times over the past two years to transmit power between these two
regions. However, the Cable is not in operation currently.
I have testified to this Subcommittee before about the critical
role that sufficient energy infrastructure plays in both reliability
and in ensuring customer benefits. (Failure of infrastructure
development to keep up with customer demands certainly played a central
role in the California energy market price spike in 2000-2001). The CSC
project is the first operational example of entrepreneurial, risk-
bearing transmission that the Federal Energy Regulatory Commission
(Commission) has sought to encourage in the post-Energy Policy Act of
1992 electric industry. ``Merchant'' transmission differs from
traditional transmission in that its costs are not recovered through
regulated rates, but through negotiated arrangements between the
transmission line owner and the customer. This is important because the
risks of merchant transmission are borne by the project's investors,
and not captive ratepayers. In 2000, our Commission ruled on the rates,
terms and conditions for transmission service over the Cable, and found
that the Cable will enhance competition by expanding capacity and
trading opportunities between the New England and New York markets. The
Commission also found that the Cable will provide economic benefits to
electric customers and producers in both markets while imposing no risk
or cost on captive customers in any market. The Cable may also provide
reliability benefits, particularly at times of electrical shortages.
Today, four years after our Commission authorized rates, terms and
conditions for the Cable, and after investors and wholesale
transmission customers have made the necessary investments to get it
built, the Cable is being taken out of operation.
The Cable provides a classic illustration of the interstate nature
of the transmission grid. The planning, construction, and operation of
the Cable affect both the regional marketplace and regional
reliability. Decisions regarding the operation of the Cable underscore
the importance of assessing economic and reliability issues from a
regional perspective. Building and operating a transmission line can
have economic and reliability consequences that go beyond any single
State. Therefore, questions about who should pay for those consequences
must, of necessity, be considered in ways that fully protect customers
and citizens of the affected States.
II. BACKGROUND
On June 1, 2000, the Commission approved the rates, terms and
conditions for transmission service over the Cable (June 1 Order). This
was the first time the Commission approved rates, terms and conditions
for a merchant transmission project. The June 1 Order contained the
findings of economic benefits noted above. The Commission imposed
several conditions on its approval. For example, the application
included a proposal to hold an ``open season'' to solicit customers for
the Cable, and the Commission imposed conditions to ensure that the
open season process was nondiscriminatory, fair and transparent.
In June 2002, the Commission accepted, with modifications, NEPOOL's
amendment to its open access transmission tariff to integrate the CSC
into the NEPOOL regional transmission system operated and administered
by ISO New England (ISO-NE). The Commission said it was ``pleased that
the parties worked together to meet the challenges facing the
development of a new type of entity into the energy market.''
Despite the foregoing, and despite the fact that none of the costs
of the CSC are being included in captive Connecticut ratepayers' rates,
units of the Connecticut government have opposed the operation of the
Cable. As a result, the Cable has been operated only when authorized by
emergency order of the U.S. Secretary of Energy--from August 1, 2002 to
October 1, 2002 (to alleviate the emergency supply situation caused by
a heat wave), and from August 14, 2003 to May 7, 2004 (to alleviate the
post-Blackout disruptions in electric transmission service, as well as
provide valuable voltage support and stabilization services for the
electric transmission systems in both New England and New York). The
Secretary has issued these orders pursuant to section 202(c) of the
Federal Power Act, 16 U.S.C. 824a(c) (2000) (FPA), and section 301(b)
of the Department of Energy Organization Act, 42 U.S.C. 7151(b)
(2000).
I would note that Connecticut and Long Island are interconnected
not only by the Cross-Sound Cable but also by a set of electrical
cables known as the ``1385 Cables.'' The 1385 Cables have been in use
for over 30 years. In recent years, they have experienced increasing
operational problems. A pending case before the Commission involves a
Connecticut utility's request that the Commission use its authority
under section 210 of the FPA to order a New York utility to assist in
replacing the 1385 Cables. Among other things, section 210 allows the
Commission to issue an order requiring the physical interconnection
between two utilities, or such action as may be necessary to make
effective any physical interconnection, if, after certain procedures,
the Commission determines that such an order is in the public interest
and would: ``(A) encourage overall conservation of energy or capital,
(B) optimize the efficiency of use of facilities and resources, or (C)
improve the reliability of any electric utility system--to which the
order applies.'' Since the case is pending, I cannot discuss its merits
further at this time.
III. OPERATION OF THE CROSS-SOUND CABLE
Over the past decade, investment in the nation's transmission
infrastructure has not kept pace with load growth or with customers'
desire for greater competition in wholesale power markets. As a result,
transmission congestion and energy price differentials between regions
have increased. Construction of appropriate transmission facilities and
other measures that make more transmission capacity available to market
participants can yield significant benefits in increased competition
and improved reliability. Stand-alone, or merchant, transmission
companies have proposed several projects to expand capacity between
regions such as New England and New York. The Commission has sought to
encourage such projects.
In the case of the CSC, the Commission specifically found that the
project would provide economic benefits to customers. The U.S.
Secretary of Energy has found that, at least in certain circumstances,
the operation of the Cable is needed for reliability purposes. This
summer could be one of those circumstances. The Cable is fully built
and ready for use. Operation of the Cable is supported by one State and
opposed by another, each advocating its own parochial interests.
The authority granted to the U.S Secretary of Energy under FPA
section 202(c) has been an important tool for responding to emergency
circumstances. Legislation has been proposed that, essentially, would
codify the Secretary's most recent order requiring operation of the
Cable until Congress legislates otherwise. Operation of the Cable would
ensure that the regional benefits of the Cable will flow to customers.
Further, it might be a good time to consider expanding the
application of section 202(c) to also include orders requiring the
operation of existing facilities whenever such operation is found to be
in the public interest, not just in the event of an emergency. The view
of one State should not be the sole determinant of whether a region's
electrical customers receive the economic and reliability benefits of
facilities that have already been built. In these narrow circumstances,
the protection of interstate commerce may warrant a greater federal
role.
This suggestion is related to, but separate from, the issue in the
pending energy bill of having a federal backstop for siting of
significant new interstate power transmission projects. The same
conflict that gave rise to that provision of the pending legislation is
present in the Cable case, i.e., while the interconnected electricity
grid is interstate in nature, each State has the jurisdictional
authority to site new transmission lines needed for the region.
Therefore, a federal arbiter is needed when States cannot agree on such
issues. The national public interest in reliable supplies of energy for
all customers at reasonable prices cannot be ignored.
There is also a bigger real-world issue here. The greater New York
City electric power marketplace, which also encompasses Long Island,
northern New Jersey and southwestern Connecticut, is among the largest
load centers in the country. The planning and operation of that
regional power grid falls under the management of three separate grid
organizations--the NYISO, ISO-NE, and the PJM Interconnection. This
split requires a continuous, rigorous coordination effort on many
levels--reliability, planning, markets, and fuels. To this end, the
Commission is holding another in its series of regional infrastructure
conferences on June 3, 2004, to explore the adequacy and development of
electric, natural gas, and other energy infrastructure in the
Northeast, including New York and New England. I expect that many of
the issues addressed in this hearing, plus others from the natural gas
industry, will be raised in the day-long conference, which my
colleagues and I will lead. I will report on what we hear to this
Subcommittee shortly thereafter.
As always, my colleagues, I and our staff are always available to
assist the Subcommittee in any way we can.
Mr. Hall. Thank you.
Chair recognizes Ms. Otis for 5 minutes.
STATEMENT OF LEE OTIS
Ms. Otis. Thank you, Mr. Chairman and distinguished members
of the committee. I would like to review very briefly the
sequence of events that led to the Secretary's issuance of the
various emergency orders under section 202 and his recent
decision on May 7 to declare the emergency ended.
As everyone knows, on August 14, the Northeast United
States and Canada experienced the worst blackout that has ever
occurred in North America, and as a result of that, within
hours of the blackout, the Secretary of Energy issued his
original order after consultation with the various interested
parties, energizing the Cross-Sound Cable. On August 28, after
reviewing the circumstances, he concluded that because the
cause of the blackout had not yet been ascertained, an
emergency continued to exist, and, therefore, that he would
keep the cable operational until further order.
After the task force on the blackout, the multinational
task force, completed its investigation into the causes of the
blackout and concluded in early April that the causes were not
related to the absence of the cable or to its not being in
operation. The Secretary determined on May 7 that no emergency
existed, and, therefore, he ended his original order.
What that points to is the core of what the Secretary's
powers are under section 202(c) of the Federal Power Act, which
is that the Federal Power Act authorizes the Secretary to act
if he determines that an emergency exists, and to require by
order a temporary connection of facilities and delivery
interchange or transmission of electric energy as in his
judgment will best meet the emergency and serve the public
interest. This authority reserves considerable judgment to the
Secretary, but is limited to situations in which the Secretary
has determined that an emergency exists. He cannot order the
activation or connection of a transmission facility in the
absence of an emergency even if he believes the line is
important to reliability.
On the other hand, the Act does not define exactly what an
emergency is. It gives some examples, such as sudden increase
in the demand for electric energy or shortage of electric
energy facilities for the generation or transmission of
electric energy, but it does not define it.
As the Secretary stated in his May 7 order, the Department
of Energy believes that the Cross-Sound Cable is an important
transmission asset, and that it contributes to the reliability
of the electric transmission grid in New England and New York.
However, as I noted, his authority under section 202(c) is not
a broad authority to order operation of the cable whenever he
thinks it will advance reliability, but is limited to
situations where he determines that an emergency exists.
Finally, the Department of Energy has stated numerous times
that existing law is not sufficient to protect electric
reliability and to promote the construction and operation of
needed electric transmission facilities. Therefore, the
administration strongly supports the electricity provisions in
Title 12 of the H.R. 6 conference report.
In conclusion, the Secretary has not hesitated to use the
section 202(c) authority when presented with information that
warrants the finding that an emergency exists. He has issued
202(c) orders concerning the Cross-Sound Cable on several
occasions in the past. He stands ready to do so again in the
future if, in his judgment, it is shown that an emergency
exists.
We will continue to monitor reliability and the
transmission situation in the Northeast and elsewhere in the
country. Any person is invited to bring to the Department's
attention at any time data or information that the person
believes show that an emergency exists and that a 202(c) order
would meet the emergency and be in the public interest. Thank
you for allowing me to testify.
[The prepared statement of Lee Otis follows:]
Prepared Statement of Lee Liberman Otis, General Counsel, U.S.
Department of Energy
Mr. Chairman and Members of the Subcommittee, thank you for
inviting me to testify concerning the Secretary of Energy's recent
orders concerning the Cross-Sound Cable and the effect of the Cable's
operation on reliability.
On May 7, 2004, Secretary Abraham issued Order No. 202-03-4, in
which he determined that the emergency giving rise to his earlier
orders authorizing use of the Cable had ceased to exist, and that no
other emergency had been demonstrated justifying continued
authorization to use the Cable. The May 7 order briefly recounts the
events leading up to it, but I will summarize them here, and also will
summarize the legal authority that the Secretary used to issue his
Cross-Sound Cable orders.
Section 202(c) of the Federal Power Act gives the Secretary of
Energy the authority to determine that an ``emergency'' exists, and
``to require by order such temporary connection of facilities and such
generation, delivery, interchange, or transmission of electric energy
as in [the Secretary's] judgment will best meet the emergency and serve
the public interest.'' It is this authority that Secretary Abraham has
used when he has directed operation of the Cross-Sound Cable.
By its terms, this section of the Federal Power Act is limited to
situations in which the Secretary has determined an ``emergency''
exists. However, neither the Act nor DOE's regulations define exactly
what an ``emergency'' is. The Act does state that an emergency can
exist because of ``a sudden increase in the demand for electric energy,
or a shortage of electric energy or of facilities for the generation or
transmission of electric energy, or of fuel or water for generating
facilities, or other causes,'' but it leaves to the Secretary's
judgment exactly what set of facts and circumstances might constitute
an emergency, as well as the determination of whether to issue an order
under section 202(c) and what terms of such an order might ``best meet
the emergency and serve the public interest.''
On August 14, 2003, the United States and Canada experienced the
largest electric transmission grid failure and blackout that has ever
occurred in North America. That same day, in order to alleviate the
emergency situation presented by the blackout, the Secretary exercised
his authority under Federal Power Act section 202(c) and issued Order
No. 202-03-1, which authorized operation of the Cross-Sound Cable. The
Secretary issued that order after DOE officials had consulted with the
independent system operators in both New England and New York, as well
as officials at the North American Electric Reliability Council,
electric utilities in both Connecticut and New York, and the owner of
the Cross-Sound Cable.
The next day, President Bush and Canadian Prime Minister Chretien
announced the creation of a bi-national task force to investigate the
causes of the blackout and why spread, as well as to formulate
recommendations about what might be done to prevent blackouts from
occurring in the future.
The task force immediately commenced its investigative work, but
because of the immense amount of data and information that needed to be
analyzed and the extensive investigative work that was necessary, it
was not possible to reach an immediate conclusion as to what had caused
the blackout or why it spread. Therefore, on August 28, 2003, and even
though electric service had been restored in the area affected by the
August 14 blackout, Secretary Abraham issued an order finding the
continued existence of an emergency, and determining that operation of
the Cross-Sound Cable should continue to be authorized until such time
as he issued an order determining that the emergency had ended.
The next day, August 29, 2003, State officials from Connecticut
filed papers with DOE seeking rehearing of the August 28 order and
asking that DOE stay the operation of the order pending judicial
action. Several days later, the Secretary issued an order calling for
the submission of briefs and information with respect both to the
rehearing request and the stay request, and establishing a schedule for
the submission of that information. His order identified a publicly-
accessible DOE website address at which all materials submitted to DOE
would be made available.
In response, numerous persons, including Members of Congress,
submitted letters, data and information to DOE concerning the Cross-
Sound Cable and its operation. All of these submissions were made
publicly available, and the public was given the opportunity to comment
on the submissions made by other persons.
At the same time, the work of the bi-national task force
investigating the August 14 blackout was proceeding. The task force
issued an interim report in November 2003 that set forth tentative
conclusions concerning how the blackout began and why it spread to
certain parts of the United States and Canada. The interim report
called for public comment concerning all aspects of the report, and
public meetings were held in both the United States and Canada
concerning the interim report. The task force also invited the
submission of written comments and recommendations, which were made
publicly available.
In early April 2004, the bi-national task force issued its final
report. That report identified the direct causes and contributing
factors for the August 14 blackout. The report states that the blackout
began in Ohio, and describes in detail the sequence of events leading
up to the blackout, and that occurred as the blackout spread across an
area encompassing 50 million people.
The Cross-Sound Cable was not in operation on August 14, 2003, and
the final report did not identify any effect that the non-operation of
the Cable had either on the initiation of the blackout, or on its
spread. The final report simply does not identify any particular role
that the Cable would have played in preventing or stopping the spread
of the outage, had it been in service on August 14, 2003.
After issuance of that final report, DOE considered the contents of
the report as well as DOE's earlier analysis of the data and
information that had been submitted in response to the Secretary's call
for information concerning the operation of the Cable. DOE also made
its own inquiries of the relevant Independent System Operators to
assess the power supply and transmission situation in the vicinity of
the Cross-Sound Cable.
In light of the reasons for and the terms of the August 28 order,
and the data and information submitted to and developed by DOE, the
Secretary determined that the emergency identified in his August 28
order no longer existed. That order had authorized continued operation
of the Cable based on the finding that an emergency continued to exist
because ``it has not yet been authoritatively determined what happened
on August 14 to cause the transmission system to fail resulting in the
power outage, or why the system was not able to stop the spread of the
outage.'' Once those facts were determined, as they were in the task
force's final report, and because that report did not point to any role
the Cable did or could have played in connection with the cause or the
spread of the blackout, the Secretary determined that the emergency he
earlier had identified no longer existed. He furthermore concluded that
the information that the public had submitted to him, as well as the
investigation conducted by DOE itself, did not demonstrate the
existence of any other present emergency warranting continued
authorization to operate the Cable under the authority of Federal Power
Act section 202(c). Therefore, he found that the emergency he had
identified earlier ceased to exist, and he terminated the Federal Power
Act section 202(c) authorization to operate the Cable.
As the Secretary stated in his May 7 order, DOE believes the Cross-
Sound Cable is an important transmission asset and contributes to the
reliability of the electric transmission grid in New England and New
York. In fact, the Cable was mentioned in the report of the National
Energy Policy Development Group, in May 2001, as an important
transmission asset, the operation of which had been blocked because the
State of Connecticut did not recognize the importance of the facility
to the interstate grid.
It is important to remember that under present law, however,
section 202(c) does not authorize DOE to direct operation of a
transmission facility simply because the facility is important to the
grid, promotes commerce or improves reliability. Instead, the law
requires the Secretary to find that ``an emergency exists'' before he
can invoke his authority to issue a 202(c) order. Therefore, this
section of the law was not intended to be a replacement for the
resource adequacy and transmission facility siting responsibilities
carried out by other governmental and private bodies.
Because the Administration believes that existing law is not
sufficient to adequately protect electric reliability and to promote
the construction and operation of needed electric transmission
facilities, the Administration strongly supports the electricity
provisions contained in Title XII of the H.R. 6 Conference Report,
which the House approved several months ago. The bi-national blackout
task force stated that the single most important thing that could be
done to prevent future blackouts and reduce the scope of any that do
occur is for Congress to enact the reliability provisions in H.R. 6 and
make compliance with reliability standards mandatory and enforceable.
The Administration also supports repeal of the Public Utility Holding
Company Act and supports last-resort Federal siting authority for high-
priority transmission lines--both of those provisions would encourage
investment in needed transmission and generation facilities.
Finally, I want to emphasize that although there are obvious limits
to the circumstances in which the Secretary can issue an order under
Federal Power Act section 202(c), Secretary Abraham has not hesitated
to use that authority when presented with data and information that, in
his judgment, warrant a finding that an ``emergency'' exists. He issued
an order directing operation of the Cross-Sound Cable only hours after
the August 14, 2003 blackout occurred, and continued the directive to
operate the Cable until it had been determined what happened on August
14 to cause the blackout and why the system was not able to stop the
spread of the outage. He also issued an order on August 16, 2002,
directing operation of the Cross-Sound Cable, because it had been
demonstrated that an emergency existed as a result of imminent
shortages of electric energy on Long Island.
The Department continues to monitor the reliability and
transmission situation in the Northeast and elsewhere in the country.
Any person is invited to bring to DOE's attention, at any time, data or
information that the person believes demonstrates an emergency exists
and that the Secretary should exercise his section 202(c) authority.
The Secretary stands ready to exercise that authority, with respect to
the Cross-Sound Cable or any other situation or facility, if presented
with facts that demonstrate an emergency exists, and that a 202(c)
order would alleviate the emergency and would be in the public
interest.
Thank you again for inviting me to testify today. I would be glad
to answer any questions.
Mr. Hall. Mr. Blumenthal.
STATEMENT OF RICHARD BLUMENTHAL
Mr. Blumenthal. Thank you, Mr. Chairman. And thank you for
this opportunity to be with you today, and I look forward to
answering any questions you have. I would submit for the record
the full statement that I have prepared and simply very
briefly, taking to heart the admonition that you have given to
other speakers, very briefly.
Mr. Hall. Fine. All of your statements will be accepted and
put into the record. Without objection.
Mr. Blumenthal. I want to make at the outset a very
important general point, which is that New York and Connecticut
by and large cooperate, in fact work very, very closely
together, on law enforcement, energy needs. And this dispute,
if I may characterize it as such, is a real exception to that
general pattern of cooperation. I hope there will be regional
cooperation, specific steps toward constructive discussions and
consensus that will enable us to avoid the continuing pattern
of confrontation. But it must be the result of consensus among
the States, not confrontation or conflict or overriding and
riding roughshod over legitimate States rights and sovereign
concerns.
I just want to make the point that some have made this
morning that these two States should be given the opportunity
to resolve among themselves, without the Federal Government
riding roughshod over their rights, the differences that they
have now. And in my view, there should be a streamlining of our
energy system, not steamrolling over States rights.
We have supported in Connecticut 1385 lines, upgrading and
even expanding them, which go between Norwalk and Northport. We
have expanded our 345 kV lines that provide for greater
transmission in Connecticut. We built 2,000 megawatts of
additional generating power in Connecticut to fulfill our
needs, and we have done our job in fulfilling our
responsibility.
This line is not economically neutral. It is skewed very
unfairly in favor of Long Island. The amount that Connecticut
consumers have to pay additionally is what Long Island
officials have said they will save. So there is rough agreement
on what the economic effect is. It is all skewed toward Long
Island, as has been the flow of power in the last 9 months when
the emergency order operated the cable; 99 percent of the power
has flowed to Long Island. And the voltage stabilization
benefits that supposedly accrued to Connecticut could have been
obtained through other sources. They were not necessary as a
result of this cable.
So, in my view, there are real fairness issues here, and
those fairness issues should be addressed in any system that
transmits power within a region and among States. And I think
that is the challenge for this committee and this Congress.
Now, I want to make one very stark, simple point: This
cable is illegal. My job as attorney general is to enforce the
law. We have very strong bipartisan, unified opposition to this
cable in the State of Connecticut on those consumer issues,
environmental concerns, but essentially my job is to make sure
the law is followed. And this cable is illegal because it is
not buried according to conditions that were set by the State
of Connecticut and by two Federal agencies; not just the United
States Corps of Engineers, but also the United States Marine
Fisheries Agency. And there are real impacts to potentially
violating the law in navigation and shipping into New Haven,
but there are also broader ramifications in rewarding
lawbreakers. And that is what this Congress may do if it
creates a special exception for this cable that circumvents
permit conditions that were imposed by Federal and State
agencies.
The letters that you have been given previously do not in
any way waive those permit conditions. In fact, the quotes were
taken selectively from the letters. If you read them in their
entirety, you will see that both State and Federal agencies
continue to insist on those permit conditions.
And I would just close by saying that we have a common
challenge, and we ought to work together to meet that challenge
in a way that serves the interest of fairness and national
security, but preserves State sovereignty and rights to
determine our own destinies, protect our consumers, our
environment and navigation. Thank you, Mr. Chairman.
[The prepared statement of Richard Blumenthal follows:]
Prepared Statement of Richard Blumenthal, Connecticut Attorney General
I appreciate the opportunity to speak on the topic of ``Regional
Energy Reliability and Security: Department of Energy Authority to
Energize the Cross Sound Cable.'' The Subcommittee's interest in the
critical issues of energy reliability and security is timely and
appropriate.
The Cross-Sound Cable, along with a panoply of other proposed
cables and pipelines, threatens to divide us and endanger vital common
interests. These pet projects of major energy companies, if spared
careful long-range planning and vigorous scrutiny, may wreak havoc in
Long Island Sound. We must seek regional cooperation--not confrontation
and conflict. We share critical environmental and consumer values, much
as we share Long Island Sound, a precious and precarious natural
treasure.
Connecticut has been willing to assist Long Island in addressing
its electricity shortfalls. We have actively sought to upgrade the
existing 1385 cable from Norwalk to Northport in order to stop damaging
pollution caused by the present damaged oil-leaking cable. This upgrade
will significantly increase the amount of electricity available to Long
Island from this cable line. We are also building a 345 KV transmission
from Bethel, Connecticut on the border of New York to Norwalk,
Connecticut, the site of the 1385 cable. Finally, the Connecticut
Siting Council and the Connecticut Department of Environmental
Protection approved permits for the Cross-Sound Cable, provided it met
strict safety and environmental protection standards.
This subcommittee should work to develop legislation that
encourages public officials to build consensus and to jointly and
fairly share the burdens and benefits of siting efficient and
environmentally-sound generating and transmission facilities. It should
not support hasty, ill-considered suggestions to jettison a carefully
crafted and well established state-federal permitting program that has
worked effectively for decades.
Regional cooperation and long-range planning to provide safe,
efficient and reliable electric power is obviously a desirable goal,
which I fully support. Three core conditions are essential to any
regional plan or system:
1. The plan must recognize that states are best positioned and
equipped to evaluate and assess all of the environmental and economic
impacts of specific projects.
2. Insofar as a plan imposes direct or indirect costs on ratepayers
in one state to help support reliability elsewhere, the benefits of the
plan should be shared by ratepayers in both states. The system must be
totally transparent and accountable to the states, not just federal
regulators. Indeed state consent and advice must be at its core.
Consensus is a key precondition, achieved by state agreement and
support, not federal edict or preemption.
3. Any plan must respect the fact that states own--indeed, actually
hold legal title to--the seabed of Long Island Sound in a public trust,
as they have since the founding of the Republic. This public trust
means that the federal and state governments must seek to minimize or
eliminate environmental disruption or damage.
The Cross Sound Cable, unfortunately, has so far failed to meet any
of these three core conditions. It poses real dangers to Long Island
Sound and to economically critical shipping and navigation. It
effectively robs Connecticut ratepayers to subsidize Long Island's
failure to plan and meet its energy needs, and it attempts to wrest
legal control of the Connecticut seabed away from its protection as a
``public trust'' under state and federal law.
In fact, the Cross-Sound Cable, in its present state, suffers from
numerous critical flaws, including the following:
It creates a serious and substantial hazard to economically critical
shipping and navigation.
It poses a severe threat to the environment by the need to blast the
seabed in order to place the cable at the federally required
depth.
It is patently illegal.
It costs Connecticut ratepayers millions of dollars to unfairly
subsidize Long Island ratepayers and the cable owners.
It undermines incentives for Long Island to meet its obvious and
growing energy needs, while Connecticut is taking the tough
steps needed for safe and reliable electric supply.
It provides negligible reliability benefits to Connecticut.
Shipping and navigation in New Haven Harbor is critical to
Connecticut's economy. About 75% of our critical supplies of gasoline
and fuel oil arrive by this route. In 2002, the United States Army
Corps of Engineers (Army Corps) approved the first ever longitudinal
laying of cable in a navigational channel--in the center of New Haven
Harbor's federal navigation channel only after Cross-Sound agreed to a
number of conditions. The conditions were to mitigate the possibility
that a ship might accidentally drop an anchor onto the cable--such
incidents have occurred many times in Long Island Sound, some
disastrously--or some other navigational accident. The Army Corps,
therefore, ordered the cable sunk a minimum of 6 feet below the Long
Island Sound seabed, a depth that Cross-Sound accepted as both feasible
and appropriate. This depth requirement is not arbitrary. It is needed
to ensure navigational safety in the most important energy supply port
in the region. In an emergency, a large tanker needs to quickly reduce
speed by dropping its anchor, which drags on the seabed floor for
several hundred yards. If the anchor snags the cable, it may damage the
tanker or alter its course, in addition to severing or disabling the
cable.
Following this determination of the Army Corps, the Connecticut
Department of Environmental Protection, acting under state and federal
law, approved a permit allowing the construction of the cable as long
as the construction was consistent with the Army Corps six foot depth
requirement.
Cross-Sound, after agreeing to meet this important safety
condition, failed to do so, claiming that unanticipated obstructions
prevented its compliance with the permit requirement. These supposed
unanticipated obstructions included bedrock ledge--well and widely
known for many years. In fact, in 2000, an Army Corps official had
specifically warned that, ``It's also likely that the applicant would
encounter ledge just below certain reaches of the channel.'' In other
words, the supposed unanticipated obstructions were known and willfully
disregarded.
Connecticut refused to issue a permit to operate the cable because
it failed to meet the federal safety standard. Connecticut's Department
of Environmental Protection has treated Cross-Sound Cable like any
other applicant that fails to meet permit conditions required to
safeguard the environment and public safety. Despite Cross-Sound's
efforts, the Army Corps has steadfastly refused to weaken the 6 foot
requirement.
Turning to the second problem--environmental damage--the company
concedes that the only way to bury the cable to a safe depth in the
harbor would be by blasting the bed of the Sound, drilling holes in the
bedrock, filling them with explosives such as dynamite or ammonium
nitrate fuel oil and detonating it. In addition, the National Marine
Fisheries Service has required as part of its permit for the Cross-
Sound Cable that such cable be buried at least 4 feet below the sea
floor in order to minimize adverse impacts to essential fish habitat.
The cable does not currently meet this requirement.
As to the illegality of the cable, the violation is clear. The
relevant Federal law `` section 404 of the Clean Water Act ``
appropriately gives Connecticut the legal authority to protect its
coastal waters by setting conditions before issuing permits for cable
construction. As I have explained, Cross-Sound agreed to and then
failed to meet a critical condition `` burial at least six feet under
the seafloor.
Under the Federal Power Act, the Secretary of Energy has the legal
authority to override this law, but only in a genuine emergency. In the
past, when the Secretary has invoked this power briefly in a genuine
emergency, I have not opposed it. Unfortunately, after the August, 2003
blackout ended, Secretary Abraham attempted to use it as an excuse to
order the indefinite routine operation of the Cross-Sound Cable. He did
so knowing that the cause of the blackout related to the Midwest power
grid, and that no evidence has ever existed that the presence or
absence of the Cross-Sound cable connection had anything to do with the
blackout. Only after I challenged his order in court, and only days
before I was scheduled to seek a stay of his order from the Second
Circuit Court of Appeals, did Secretary Abraham rescind his illegal and
unjustified order, effectively conceding its illegality.
The evidence is also painfully clear regarding the economic damage
the Cross-Sound cable inflicts on Connecticut ratepayers. Routine
commercial use of this cable costs Connecticut consumers an estimated
$36 million annually, due to the increase in the clearing price of
electricity delivered into Connecticut caused by the retransmission of
electricity from Connecticut to Long Island over the Cross-Sound cable.
Long Island's power generation costs are generally higher that those in
Connecticut. Electricity generally flows to the highest priced area. In
this instance, cheaper Connecticut power will flow through the cable to
Long Island, increasing demand and pushing up the state's electrical
rates. As demand rises, power is sought from less efficient plants,
called peaking plants, that generate electricity only when the need for
power is at its height. Those plants are generally the most expensive
to operate, thereby accelerating the upward pressure on prices in
Connecticut. Even worse, some of the peaking plants are among the worst
polluters, inflicting further damage on Connecticut citizens. Our
experience to date fully supports these concerns. While the Cross-Sound
Cable was operating, 99% of all transmitted electricity flowed from
Connecticut to Long Island. Future forecasts of energy needs show that
this pattern will continue.
The economic impact on Connecticut is even more unfair because Long
Island's current power deficit is entirely of its own making. LIPA has
failed to develop and build new generating and transmission
facilities--not one major plant in more than 10 years--or develop any
long term plans. LIPA admitted that it seeks to increase power
transmission to Long Island in order to avoid building needed
generators on Long Island. LIPA looks to everyone else to site its
power plants--a classic NIMBY approach.
Astonishingly, as Connecticut seeks to upgrade the Norwalk to
Northport cable and thereby increase the amount of electricity
available to Long Island on an emergency basis, LIPA has refused to pay
for its share of the upgrade. As a condition for payment, LIPA insists
that this cable be used for routine electricity supply for Long Island,
exacerbating the reliability problems that already exist in
southwestern Connecticut. Upgrading the Norwalk to Northport cable is
essential to stop its leaking of chemicals into the Sound and to repair
its severed sections, assuring that it can operate at full capacity
when necessary. We have supported replacing and upgrading this vital
link. LIPA has shunned its responsibility to do the same.
In contrast to LIPA, the State of Connecticut has recently
developed more than 2,000 megawatts of additional electrical power and
is upgrading approximately one hundred miles of transmission lines to
more efficiently move electricity throughout the state. The idea that
Connecticut ratepayers should be effectively compelled to subsidize
LIPA's arrogant improvidence is completely unacceptable, even
outrageous.
Finally, in spite of all the sound and fury, the sad truth is that
while use of the cable would save money for New York at Connecticut's
expense, it would not significantly improve Connecticut's power
reliability. After months of careful study, the Connecticut Siting
Council found that it would enhance electricity reliability in
Connecticut by less than two-tenths of one percent, an utterly
negligible change. No one has ever seriously contested this figure.
Recent claims that the cable has been repeatedly used to provide
necessary ``voltage stabilization'' to Connecticut are also completely
misleading. In fact, voltage stabilization is available to Connecticut
from numerous generators and substations. The Cross-Sound cable adds no
appreciable reliability for voltage stabilization to other presently
existing sources in Connecticut. Voltage stabilization was amply
available before Cross-Sound and remains sufficient after its shut-
down.
No one disputes the Secretary of Energy's existing legal authority
to act quickly in a real emergency to prevent a blackout on Long
Island. In fact, Cross Sound seeks to operate the cable routinely,
moving electric voltage to Long Island and money to itself. It offers
no answer to Long Island's self-inflicted problems.
Congress should learn from our experience with the Cross-Sound
Cable and enact common-sense energy policies that would require public
officials to build consensus and jointly and fairly share the burdens
and benefits of siting efficient and environmentally sound generating
and transmission facilities.
Mr. Hall. Thank you, sir.
The Chair recognizes at this time Bill Museler, president
and CEO. Recognize you for 5 minutes, sir.
STATEMENT OF WILLIAM J. MUSELER
Mr. Museler. Thank you, Mr. Chairman. I am the president of
the New York Independent System Operator. Our job is to
maintain the reliability of the power system in New York State
and also operate the electricity markets in New York State. In
a prior life I was vice president of electric operations of
Long Island Lighting Company, so I am very familiar with the
electric system on Long Island as well as the statewide New
York system.
It is very appropriate for Congress to be taking up this
matter. As was discussed earlier, electric reliability
legislation is before the Congress in several forms. It is
urgent that the Congress act on the reliability portions of
that legislation. Since 1985--excuse me, since 1965, the vast
majority of blackouts in this country have been caused by
utilities not following voluntary liability rules. The single
most important action that is required from a reliability
standpoint nationally is making those rules mandatory with
penalties for noncompliance.
With respect to the Cross-Sound Cable, I would like to
mention just a few of the things that make that cable extremely
valuable. No. 1, while the cable by itself would not have
prevented the blackout of August 14 had that cable been in
operation, since it is a DC facility, it would have speeded up
the restoration of power on Long Island and presumably helped
New York City come back faster as well because that line would
most likely have stayed energized.
In upstate New York, the Hydro Quebec DC line formed one-
third of the capacity we needed to bring the State back and
reenergize the transmission system.
Long Island, as Mr. Kessel will likely confirm, is right on
the edge this summer because of capacity. Its locality
requirements for electrical capacity are higher without the
cable available for emergency transfers. It will very likely be
shortened next year unless they are able to get more capacity
built very, very quickly.
The cable provides for emergency transfers of power in both
directions. It also provides additional economic transactions,
both ways, benefiting consumers in both States, as does the AC
system that connects both States. It expands the Northeast
markets. For reliability and for economic reasons, the Cross-
Sound Cable is a two-way street.
Finally, the transmission infrastructure in the country is
in dire need of upgrading. If projects like the Cross-Sound
Cable cannot be sited and used, we are headed for lower
reliability at a time when our economy needs the exact
opposite: better reliability.
Thank you very much for the opportunity to present these
views of the New York ISO.
[The prepared statement of William J. Museler follows:]
Prepared Statement of William J. Museler, President and CEO, New York
Independent System Operator
Good afternoon, ladies and gentlemen. My name is William J.
Museler, and I am the President and Chief Executive Officer of the New
York Independent System Operator, or NYISO. I appreciate the
opportunity to brief the Committee on our understanding of the impacts
on New York State and Long Island of the Department of Energy's
(``DOE's'') rescission of its emergency order authorizing the operation
of the Cross-Sound Cable. In the short time available since that
rescission, we have begun to analyze those impacts and, in this
testimony, I am happy to present our tentative conclusions.
Immediately prior to coming to the NYISO, I was the Executive Vice
President of the Transmission/Power Supply Group of the Tennessee
Valley Authority, which in terms of megawatts (``MW'') served, is the
size of New York. Prior to that, I was Vice President of Electric
Operations at Long Island Lighting Company. While serving as Vice
President of Electric Operations at Long Island Lighting Company, I
acquired familiarity with the electric system now operated by Long
Island Power Authority (``LIPA'') and its contractor, Keyspan. I
currently also serve as the Chairman of the ISO/RTO Council, and have
served on the North American Reliability Council (``NERC'') Board of
Trustees and as Chairman of the Southeast Electric Reliability Council.
I am a graduate of Pratt Institute in Brooklyn, New York and Worcester
Polytechnic Institute. I am a native New Yorker, born in Manhattan and
raised in College Point, Queens.
The NYISO was created to operate New York's bulk transmission
system and administer the State's wholesale electricity markets. We are
a New York not-for-profit corporation that started operation in 1999.
We are not a governmental entity, but we are pervasively regulated by
the Federal Energy Regulatory Commission (``FERC''). With respect to
certain financing authority, the Federal Power Act and New York law
provide that we are regulated by the New York State Public Service
Commission.
I will not address environmental or legal issues related to the
operation of the Cross-Sound Cable. Those issues are well beyond the
appropriate scope of the NYISO's responsibility and beyond my own
expertise. Before addressing the operational and reliability issues
under consideration this morning, I would like to observe that it is
entirely appropriate for Congress to focus immediate attention on
issues of electric reliability. Last summer, we suffered a major
blackout that threatened the economies of the region and the health,
safety and welfare of 50 million people in the Northeast, the Midwest
and parts of Canada. The international task force that investigated the
blackout determined that it was caused by a company in the Midwest that
ignored well accepted, but voluntary, reliability standards. Because
the Country's electric system is interconnected across state lines,
only the federal government can address this problem effectively. There
is legislation before you in several forms that would make compliance
with electric utility industry reliability standards mandatory. I urge
you to enact such legislation promptly, lest another blackout provide
still another object lesson for all of us.
I would now like to discuss the significance of the Cross-Sound
Cable to New York and New England. Southeastern New York State is among
the most congested locations in the United States in terms of electric
transmission. Long Island is a densely populated area immediately to
the east of New York City. Because it is an island, it presents unusual
obstacles to constructing additional electric transmission.
Transmission paths to Long Island must either go through New York City,
which presents extraordinary technical difficulties and involves huge
expense, or they must go under the Atlantic Ocean or Long Island Sound.
The Cross-Sound Cable is one of only two underwater cables
connecting Long Island to Connecticut. Two other cables connect Long
Island to Westchester County. The Cross-Sound Cable is a direct
current, or DC, ``merchant'' transmission facility. Rather than being
owned by regulated electric utilities, merchant transmission facilities
are owned by independent, lightly regulated, entrepreneurial companies.
Unlike most transmission lines, the DC characteristics of the Cross-
Sound Cable permit its operator to regulate the flow of electric energy
over the Cable. When operational, the Cross-Sound Cable could provide
up to 23% of Long Island's summer import capability. Its existence also
provides Connecticut with access to ``quick start'' combustion turbine
capacity during reserve deficiency conditions. For both New York and
New England, the Cross-Sound Cable is a two way street with respect
both to reliability and economics.
The adequacy of transmission capacity has both economic and
reliability consequences for the areas affected. The most immediate
issue, of course, is the reliability of electric supply. Insufficient
transmission capacity can have reliability consequences for Long
Island, Connecticut and the broader New York and New England regions.
In New York, the amount of generating and other resources necessary
for the State and its localities to maintain reliability must be
calculated in accordance with criteria imposed by the Northeast Power
Coordinating Council and the New York State Reliability Council. Prior
to the DOE's rescission of its Emergency Order, the NYISO had
determined that 5008 MW of generating capacity had to be physically
available on Long Island to satisfy reliability criteria.
The calculations assumed that the Cross-Sound Cable would be
available immediately in the event of an emergency. If the Cable is not
available this summer, Long Island would require additional generating
capacity physically located on the Island in order to maintain the same
level of reliability that existed when the Cross-Sound Cable was still
in operation. Therefore, unless Long Island successfully procures
additional generation for the summer, it will have a higher-than-
expected risk of outages without the Cross-Sound Cable. We understand
that LIPA is trying to do just that but, since LIPA is represented here
today, it is more appropriate that they be the ones to describe such
efforts.
The Cross-Sound Cable is also available to assist Connecticut and
New England for reliability purposes under emergency conditions. While
New England has added more generating capacity in recent years than New
York, it periodically requires imports from New York to serve its own
electrical load. For example, at times last winter there was not enough
natural gas available for some power plants in New England to operate.
Fortunately, New England was able to draw upon generating capacity in
New York to meet its needs through interties connecting the two
regions. The Cross-Sound Cable provides an additional path for imports
from New York into New England. In short, an important reason that
regions are electrically interconnected to begin with is to buttress
one another's reliability at lower cost than to achieve equivalent
reliability independently of one another.
For the NYISO, and other entities responsible for planning to meet
accepted reliability requirements, the present uncertainty regarding
the Cross-Sound Cable presents a serious problem. The Cable exists, but
we don't know whether to assume that it can be operated. Absent
Congressional action resolving the controversy over the Cable's
operation, the New
York and New England regions will continue to face uncertainty
about the availability of the cable's transmission capacity for normal
and emergency conditions. This uncertainty is more than a mere
inconvenience. It can cause needless expense and inefficiency. Electric
generation and transmission facilities take many years to plan,
finance, license and construct. Continued uncertainty can either result
in deferral of such planning and implementation or, even worse,
unnecessary construction, if the planners are unable to await a final
resolution and then guess wrong about the outcome of the controversy.
In the face of what we hope is only near term uncertainty, the
NYISO is planning to explore interim measures to gain access to the
Cross Sound Cable's capacity under emergency conditions. The NYISO will
confer with the DOE and ISO-NE to attempt to develop a standby
procedure that would permit immediate operation of the cable in the
event an emergency develops. While the DOE has been extremely
responsive in past emergencies, the problem is that emergencies can
develop in a matter of seconds or minutes, leaving insufficient time to
contact DOE, explain the situation, permit DOE to verify the problem
and issue an order in time to make a difference.
Because of the obviously pressing nature of the reliability
concerns, I have not focused today on the economic benefits of inter-
regional markets and the benefits of additional transmission capacity
to support cross boundary transactions. The ultimate purpose of the
federal policy of restructuring the electric industry was and is to
provide electric consumers with the benefits of open market
competition. I would be remiss, therefore, in concluding without noting
that FERC's extensive efforts to expand the regional and inter-regional
scope of wholesale electricity markets is dependent on the adequacy of
inter-regional transmission facilities such as the Cross-Sound Cable.
We support FERC's policies and believe that expanded regional
electricity markets will maximize the benefits of electric
restructuring for consumers.
Finally, I appreciate the attention the Congress has given to this
matter. It relates to an essential element of interstate commerce and
only the federal government can resolve these issues in an adequate and
timely manner.
Mr. Hall. Thank you very much.
We recognize Mr. Donahue, 5 minutes.
STATEMENT OF JEFFREY A. DONAHUE
Mr. Donahue. Thank you, Mr. Chairman and members of the
subcommittee. Thank you for the opportunity to speak with you
today.
While the Cross-Sound Cable has been the subject of
considerable controversy over the last couple years, one point
cannot be disputed: the Cross-Sound Cable is the first major
interstate electric transmission project built in the Northeast
in the last decade. For better or worse, the Cross-Sound Cable
has been used as a poster child for many purposes: first, as
the first market-based transmission link in the United States;
as the first application in the U.S. of advanced high-voltage,
direct-current transmission technology and advanced underground
cables; and, perhaps most widely, as a symbol of what is wrong
with our Nation's framework for siting electric infrastructure.
My testimony today will seek to provide the subcommittee
with the facts regarding some important points that you have
heard earlier today. Specifically, my testimony will focus on
three key points: the operation of the Cross-Sound Cable
provides significant and substantial benefits to Connecticut
and New York both in the form of improved reliability, as you
heard from Mr. Museler, and in enhancing trade of energy
between the New York and New England regions.
Operation of the cable ``as is where is'' today provides
absolutely no impact to the environment or absolutely no impact
to navigation in the New Haven Harbor or elsewhere in Long
Island Sound.
Finally, Cross-Sound Cable is currently in an unacceptable
Catch-22 situation created by the Connecticut authorities under
which Connecticut refuses to let us operate on the grounds that
certain permit conditions have not been met despite all the
agencies in Connecticut and the national level acknowledging
there are no impacts, while at the same time refusing to
consider our request for either complying with the permits,
which we want to do, or waiving subject permit conditions.
First, the issue of the significant benefits to Connecticut
and New York Long Island. As you heard, the Cross-Sound Cable
was not energized during the August 14 blackout. At 11 that
evening on August 14, there was a conference call between the
system operators, Cross-Sound Cable, LIPA, the Department of
Energy, and we were ordered to immediately activate the
project. Within 12 hours the project was activated, and we were
transferring a significant amount of energy to Long Island,
helping consumers come back on line and, very importantly,
helping stabilize the grid.
During that first couple days of the recovery from the
blackout, the facilities were transferring not only energy to
Long Island that was severely needed, but also helped stabilize
the voltage when there was a severe lightning storm that came
through the area and disrupted transmission lines on Long
Island.
Since that time, since August 14, the project has operated
18 times dynamically, automatically, when there have been
equipment failures or lightning strikes on the transmission
grid. It is improving the reliability of the grid on both
sides. Two-thirds of those 18 times occurred in Connecticut.
And, finally, since August 14, these facilities have
provided significant voltage support in both Long Island and
New York. It is a service that must have some value because we
are ordered on a regular basis to provide it, and we do at the
direction of the system operators in Connecticut who have the
responsibility of ensuring that the grid operates reliably.
Also, the project has been used on several occasions to
help the wholesale markets in Connecticut and in Long Island.
In fact, when Connecticut's energy supply was at dangerously
low levels during an extreme cold spell in January 2004, we
were ordered by the New England ISO to stop immediately any
transfers to Long Island, which, of course, we did immediately,
and LIPO was ordered to make up to 200 megawatts of energy
immediately available to export to Long Island because of the
critical cold spell they had. LIPO had significant and
sufficient resources to do that, and we were ready to supply
the energy. Luckily for Connecticut, the temperatures
increased, the load was left low, and Long Island did not have
to ship the power in the end, but we were available to provide
that service. We also tempered wholesale prices during that
time. So the project does provide significant benefits.
There is no environmental impact of operating as is where
is. All State and Federal agencies with jurisdiction over the
cable have reviewed operation of the cable as is where is.
Specifically the Connecticut Department of Environmental
Protection, the National Marine Fisheries and the U.S. Army
Corps of Engineers all have determined that there is absolutely
no environmental impact as of operating as is where is and no
threat to navigation or maintenance of the Federal channel.
The DEP has looked at this for quite some time. I think it
is interesting to note a letter that they wrote on June 13,
2002, to Mr. Blumenthal. In that letter they made it very clear
that the published rhetoric of this project was eclipsing the
facts. I would like to quote from that letter, from Mr. Art
Rocque, the Chairman of the Department of Environmental
Protection, to Mr. Blumenthal: ``I would be remiss if I did not
note my disappointment in your characterization of the impacts
associated with both the installation of the cable and the
failure to attain greater depths in parts of the Federal
channel as serious, critical and devastating to the
environment. From an environmental perspective the cable
project pales in comparison with even maintenance dredging of
the Federal navigational channel in New Haven. Published
rhetoric has eclipsed facts on this project at least from an
environmental standpoint.''
The Catch-22. We are not happy. I can say we spoke with all
the fishermen that we could find, with the harbor master, with
the pilots, with the U.S. Army Corps of Engineers. We spent
millions of dollars surveying the route, working with the
Connecticut Siting Council, looking at the harbor. We were
requested by the U.S. Army Corps of Engineers would we consider
a minus 48 burial depth below mean water. After thorough
investigation and consultation with our engineers and the Corps
we agreed. We knew about rock in the further reaches of the
channel that Ms. DeLauro spoke of earlier. We surveyed it
completely, and we avoided it all. Unfortunately we did find
rock in an area that was not on any charts or any logs that we
had done or the Corps or anybody else had done over the past
100 years, and we are now in this current situation.
We have made five separate proposals to the Connecticut DEP
to either bury the cable to its permitted depth or operate the
cable in its current location with no environmental impact.
Four of those five proposals have been refused. The fifth is
still pending. On January 6, 2003, the DEP wrote us, ``While we
may not have any environmental concerns with the operation of
the cable in its current conditions, we do have significant
procedural concerns.''
The substantial and economic benefits and improved
reliability that is available from our project come at no cost
to Connecticut and without any harm to the environment or
threat to navigation in New Haven Harbor or anywhere else on
Long Island Sound. Instead of enjoying the Cross-Sound Cable
benefits, Connecticut insists on maintaining this Catch-22
situation under which Connecticut precludes operation of the
cable on the grounds that we don't meet permit conditions, yet
will not allow the Connecticut DEP to evaluate our request to
make modifications.
I think this is wrong. I think public policy needs to be
debated. And I respectfully urge the subcommittee to approve
necessary legislation to immediately reenergize and place into
regular operation the Cross-Sound Cable so that Connecticut,
New York, and the region can enjoy the substantial benefits of
the project. We thank you for your time.
[The prepared statement of Jeffrey A. Donahue follows:]
Prepared Statement of Jeffrey A. Donahue, Chairman and CEO, Cross-Sound
Cable Company, LLC
I. INTRODUCTION AND SUMMARY
Mr. Chairman and Members of the Subcommittee: Thank you for the
opportunity to speak today on the many benefits the Cross Sound Cable
electric transmission project provides to Connecticut, New York, and
the Northeast. My name is Jeffrey A. Donahue, and I am Chairman and
Chief Executive Officer of Cross-Sound Cable Company, LLC (``CSC
LLC''). A summary of my experience and qualifications is attached as
Exhibit JAD-1.
While the Cross Sound Cable (``CSC'' or ``Project'') has been the
subject of considerable controversy over the last few years, one point
is incontrovertible--the CSC is the first major interstate electric
transmission project to be built in the Northeast in more than a
decade. For better or worse, the CSC has been used as a ``poster
child'' for many purposes: as the first market-based transmission link
in the U.S.; as the first application in the U.S. of advanced high
voltage direct current transmission technology and advanced underground
cable installation techniques; and, perhaps most widely, as a symbol of
what is wrong with our Nation's framework for siting needed electric
transmission infrastructure.
Rather than add to the political rhetoric you may have heard
regarding the CSC, my testimony today seeks to provide the Subcommittee
with the facts regarding this important infrastructure project.
Specifically, my testimony makes the following three key points:
1. Operation of the CSC provides significant and substantial benefits
to Connecticut and New York, both in the form of improved
reliability to the electric grid and enhanced trade of energy
between New England and New York.
2. Operation of the CSC ``as is where is'' has absolutely NO impact on
the environment of Long Island Sound, nor does it provide any
impediment to navigation in New Haven Harbor or elsewhere in
Long Island Sound.
3. The CSC is currently in an unacceptable ``Catch-22'' situation
created by Connecticut authorities, under which Connecticut
refuses to let the CSC operate on the grounds that certain
permit conditions have not been met (despite acknowledging the
lack of impacts from CSC operation) while at the same time
refusing to consider CSC LLC's requests to either comply with
or waive the subject permit conditions.
With this testimony, I intend to provide the Subcommittee with the
facts and background necessary to gain a better understanding of the
CSC and the need for its immediate re-energization and placement into
regular commercial service through the enactment of Federal
legislation.
II. DESCRIPTION OF THE CROSS SOUND CABLE
The CSC is a 330 megawatt bi-directional, high voltage direct
current and fiber optic cable system that runs under Long Island Sound
and can transmit electricity in either direction between New Haven,
Connecticut and Brookhaven, Long Island, New York. CSC LLC commissioned
the Project in August 2002. CSC LLC is a joint venture between
TransEnergie U.S. Ltd., a wholly-owned subsidiary of Hydro-Quebec, and
United Capital Investments, Inc., a non-regulated business unit of UIL
Holdings, Inc., which owns the United Illuminating Company, a regulated
utility in Connecticut.
III. HISTORY OF THE CROSS SOUND CABLE
My October 2003 affidavit to the Department of Energy, attached as
Exhibit JAD-2, provides a complete history of the permitting of the
Project. For ease of reference, I have summarized this history below.
On June 1, 2000, the Federal Energy Regulatory Commission
(``FERC'') granted the CSC project sponsors the first-of-its-kind
authorization to make sales of electric transmission capacity in
interstate commerce at negotiated rates. TransEnergie U.S. Ltd., 91
FERC 61,230 (2000). FERC granted this authorization because the full
financial risk for the project costs is borne by the developer (i.e.,
CSC LLC) rather than captive ratepayers, and because the project
``enhances competition and market integration by expanding capacity and
trading opportunities between the New England and New York markets.''
Id. at 61,838. Pursuant to an ``open season'' auction process, the Long
Island Power Authority (``LIPA'') subscribed to the full capacity of
the CSC.
CSC LLC then began the process to obtain the required state and
federal permits. The New York State Public Service Commission
(``NYPSC'') granted a certificate of environmental compatibility and
public need on June 27, 2001, finding that the CSC will ``enhance
regional and local competition in the electric power industry and []
improve system reliability.'' (NYPSC Article VII approval at 12.) The
Connecticut Siting Council (``Siting Council'') followed suit on
January 3, 2002, finding that ``the proposed project would enhance the
inter-regional electric transmission infrastructure and improve the
reliability and efficiencies of the electric system here in Connecticut
as well as in New York.'' (Siting Council Decision and Order at 1.) As
the Siting Council recognized, ``recent events have demonstrated that
preparedness and cooperation [among the states] are in the best
interest of the State, region, and the nation.'' Id.
Then, in March 2002, the U.S. Army Corps of Engineers (``Army
Corps'') and Connecticut Department of Environmental Protection
(``DEP'') issued the necessary permits for CSC LLC to install the
Project. The permits each included an identical condition that, within
the Federal Navigation Channel (``Federal Channel'') in New Haven
Harbor, the Project's cable system must be buried to a depth no less
than the deeper of six feet below the seabed or 48 feet below mean
lower low water. The reason for this requirement was to accommodate the
possible future deepening of the Federal Channel by the Army Corps,
although the Army Corps currently has no plans to deepen the Federal
Channel. Significantly, the DEP and Army Corps permits each grant CSC
LLC a period of years for the completion of all installation work for
the CSC, including meeting the burial depth requirement.1
For the areas outside the Federal Channel, the Army Corps and DEP
permits required cable system burial depths of at least 4 feet and 6
feet, respectively, below the seabed of the Sound.
---------------------------------------------------------------------------
\1\ The DEP permit requires compliance with the permit conditions
within 3 years from the date of issuance of the permit. The Army Corps
has, by letter, authorized operation of the CSC for an indefinite
period of time while CSC works in good faith to address the permit
depth requirements.
---------------------------------------------------------------------------
In May 2002, CSC LLC substantially finished installation of the
cable system in accordance with its permits. However, when burying the
cable system, CSC LLC encountered previously undiscovered hard
sediments and bedrock protrusions along portions of the route within
the Federal Channel. CSC LLC immediately notified DEP and Army Corps
that it was unable to achieve the permitted burial depth in all
locations. The CSC is buried to the permit depth along 98 percent of
the entire span, and over 90% of the route within the Federal Channel
to an average of 50.7 feet below mean lower low water, well below the
required level of minus 48 feet.
IV. OPERATION OF THE CSC PROVIDES SIGNIFICANT AND SUBSTANTIAL BENEFITS
TO CONNECTICUT, NEW YORK AND THE REGION
A. The CSC Significantly Improves the Reliability of the Connecticut
and New York Grids
Upon being energized pursuant to the Secretary of Energy's orders
in the wake of the August 2003 blackout, the CSC assisted in restoring
power to and stabilizing the transmission system in the northeastern
United States. The Secretary's order allowed the CSC to transmit and
deliver power and to provide critical voltage support and stabilization
services to the transmission systems in Connecticut and New York.
1. Voltage Support for the Connecticut and Long Island Electric Grids
Since September 1, 2003, the CSC has been operating with excellent
consistency and has been recognized for its value in ensuring a
reliable power supply in both Connecticut and New York.2
ISO-New England (the independent operator of the New England
transmission system) directs the operators of the CSC when to transmit
power over the CSC and when to provide (simultaneously or separately)
voltage support to the neighboring transmission systems. The inherent
capability of the high voltage direct current cable system allows it to
act immediately and automatically to help smooth out the aftershocks of
electric system spikes and other disturbances in Connecticut and New
York, which in turn lowers the risk of other transmission lines
switching off and magnifying a system problem.
---------------------------------------------------------------------------
\2\ ISO-New England, Inc. has stated that the CSC ``offers an
overall benefit to New England'' because the facility is a ``valuable
tool'' in case the system faces any additional system instability.
Blackout Fails to Subdue Connecticut's Opposition to Activation of
Cross Sound, Power Daily Northeast, August 20, 2003.
---------------------------------------------------------------------------
While the CSC operated full time pursuant to the DOE order, CSC LLC
responded to 108 requests by ISO-New England and 9 requests by the New
York Independent System Operator (``NYISO'') to help maintain a steady
operating voltage on the Connecticut and New York transmission systems,
respectively. Importantly, the CSC's capability to respond to these
grid operators' requests for voltage stabilization not only provides
reliability benefit, but also provides environmental benefit, as it
reduces the need to start up less efficient and dirtier power plants
(including plants in New Haven) that would otherwise be needed to
provide the same level of service.
In addition to responding to requests by ISO-New England or NYISO
to forestall anticipated difficulties, the CSC also responds
automatically to unanticipated system disturbances. During operation
pursuant to the DOE order, the CSC responded 18 times to reduce system
disturbances caused by lightning strikes, transformer failures,
transmission line faults and unknown events. Twelve of these responses
(two-thirds) were to disturbances on the Connecticut grid.3
---------------------------------------------------------------------------
\3\ In Connecticut, automatic CSC responses were on September 2,
15, 23; October 1, 10, 14, 17, 31 (twice); January 6, February 3 and
March 5. In New York, automatic CSC responses were on August 17,
September 4, October 14, March 3 and 5, and May 3.
---------------------------------------------------------------------------
2. The CSC Provides Another Critical Path for Emergency Energy and
Reserves
In addition to stabilizing the regional transmission system, the
CSC has been used as an operating reserve in times of power scarcity.
In fact, when Connecticut's energy supply was at dangerously low levels
during an extreme cold spell in January 2004, the CSC was on standby at
ISO-New England's request to export 200 megawatts over the CSC from
Long Island to Connecticut. During this period, the CSC (while it did
not ultimately have to export any power from New England to New York)
remained on standby in anticipation of an order to transmit power from
Long Island to Connecticut.
Southwest Connecticut has been widely identified as one of the most
transmission-deficient and capacity-constrained areas in the U.S.
transmission system. Long Island has exported power to Southwest
Connecticut many times in the past, including during the July 2, 2002
heat wave, using the existing ``1385'' submarine cable between Norwalk,
Connecticut and Northport, New York. Last fall, ISO-New England and
NYISO coordinated a successful test that sent power from New England
over the Cross Sound Cable to Long Island while simultaneously
returning power from Long Island over the 1385 cable to Connecticut.
Energy exports out of New England have no impact on the reliability
of the New England system. In fact, ISO-New England will not schedule
any exports out of New England if the transfer of such power would
degrade the reliability of the New England system. Energy flows over
the CSC are jointly controlled by the NYISO and ISO-New England under
the same reliability rules applied to all other interconnections
between New York and New England. Under those rules, energy flows over
any transmission line will only occur if such flows do not jeopardize
the electric system of the exporting region.
B. The CSC Provides Valuable Economic Benefits to Connecticut and New
York
Operation of the CSC benefits Connecticut electricity consumers.
The affidavit submitted to DOE by my colleague Dr. Raymond L. Coxe
(attached as Exhibit JAD-3) provides a full discussion of the CSC's
numerous economic and reliability benefits to Connecticut.
Specifically, Dr. Coxe found that for the years of 2004 and 2005,
the CSC is expected to provide reliability and economic benefits of
approximately $40 million per year to electricity market participants
in New York and New England.4 Failing to operate the CSC
during this period would forego those benefits, thus unnecessarily
increasing costs to consumers in both regions. In any evaluation of the
public interest regarding the operation of the CSC, the potential loss
of these benefits must be considered. Clearly, the public interest
benefits of the continued operation of the CSC are tangible and
substantial.
---------------------------------------------------------------------------
\4\ This figure does not include the cost of emergency generating
facilities that LIPA has announced will be required to replace the
power transmitted by Cross Sound Cable this summer.
---------------------------------------------------------------------------
Independent analyses of the impact of discontinuing operation of
the CSC confirm our internal analyses. On October 24, 2003, one of the
world's leading energy research and consulting firms, Cambridge Energy
Research Associates (``CERA'') published an analysis on the impact of
the CSC. This report, CERA Alert: Effect of the Cross Sound Cable,
describes CERA's simulation of the operation of the electricity markets
in Connecticut and Long Island for 2004 and 2005, for the following two
cases:
A Base Case which reflected the operation of the CSC during those
years; and
A Change Case in which the CSC was not available for operation.
In these simulations, CERA used the same base case assumptions that
CERA is using for its other work on transmission congestion and
generation asset valuation.
The CERA Alert summarizes CERA's analysis of wholesale electricity
market prices in Connecticut and on Long Island. The CERA Alert notes
that failure to continue operation of the CSC would raise average
annual wholesale spot electricity prices on Long Island by between 4%
and 5%, with no corresponding reduction in average annual wholesale
electricity prices in Connecticut.
Regulatory agencies with direct responsibility and jurisdiction
over the CSC have recognized the significant economic benefits to
Connecticut provided by the CSC. These independent agencies include the
Connecticut Siting Council, the FERC, and the NYPSC.
The Connecticut Siting Council, after a full consideration and
review, unanimously concluded that the CSC would provide a public
benefit to Connecticut. Specifically, the Siting Council found that
``the wholesale price of electricity in New England should not increase
with the export of up to 330 MW of electricity from Connecticut to Long
Island.'' (Findings of Fact No. 23). The Siting Council further found
that the CSC ``could increase the competition and markets available to
electric generators in New England and Long Island'' (Findings of Fact
No. 15) and that ``an open competitive market for electricity, enhanced
by the increased capability for trade [provided by the CSC], will
result in increased private investment in infrastructure, and lower
electricity costs for the region.'' (Siting Council Decision and Order
at 1.)
Further evidence of the CSC's benefits to Connecticut is the FERC's
approval of the CSC. In its order approving rates for the CSC, FERC
stated that the CSC ``enhances competition and market integration by
expanding capacity and trading opportunities between the New England
and New York markets.'' (FERC order at 7.) FERC further found that the
CSC ``will provide benefits to electric consumers and producers in both
markets while imposing no risk or cost on captive customers in any
market.'' Id.
V. OPERATION OF THE CSC HAS NO ENVIRONMENTAL OR NAVIGATIONAL IMPACT
A. Agency Findings of No Harm to Operate Cable As Is
Both Federal and State agencies have confirmed that operation of
the CSC ``as is where is'' neither causes any harm to the environment
nor poses any threat to navigation. Specifically, neither the Army
Corps nor the DEP have raised any environmental or substantive
objection to operating the CSC at its current depth. DEP itself
describes its objection as procedural, driven by a concern about the
scope of Connecticut's legislative moratorium on Long Island Sound
energy projects, not by environmental issues.
1. Army Corps Finding of No Harm to Environment or Navigation
The Army Corps has determined that operation of the cable as
installed would cause no environmental harm or interference with
navigation. Accordingly, the Army Corps has expressly authorized
operation of the CSC while CSC LLC continues work toward attaining the
required depth.
On December 30, 2002, the Army Corps issued a letter to CSC LLC
confirming that operation would not pose navigational or environmental
harm and stating that the Army Corps had no objection to present cable
operation at the current depth while CSC LLC sought to work with the
DEP to obtain necessary approvals to reach the authorized depth. The
letter stated:
The Corps of Engineers, in consultation with National Marine
Fisheries Service, has determined that there will be no undue
short-term environmental harm or interference with navigation
with the cable in its present location until full burial depth
can be achieved. Since you are working in good faith to reach
the required burial depth, the Corps of Engineers has no
objections to you operating the cable at this time.
2. DEP Finding of No Threat to Fisheries Resources from Operation at
Present Depth
The DEP made a similar determination of no environmental harm from
operation of the cable system as installed. Shortly after CSC LLC
notified DEP that the cable could not buried to the permitted depth in
a few locations, DEP Commissioner Arthur J. Rocque responded in a June
13, 2002 letter to a letter from Richard Blumenthal, Attorney General
of Connecticut, by placing the environmental impacts in appropriate
perspective and expressing his concern about the ``published rhetoric''
about such impacts:
I would be remiss if I did not note my disappointment in your
characterization of the impacts associated with both the
installation of the cable and the failure to attain greater
depths in part of the federal channel as serious, critical and
devastating environmental impacts . . . From an environmental
perspective, this cable project pales in comparison to even
maintenance dredging of the federal navigational channel in New
Haven Harbor ...[P]ublished rhetoric has eclipsed facts on this
project, at least from an environmental impact standpoint.
However, in contrast to the Army Corps, the DEP stated that, as a
matter of procedure, it would not permit operation of the CSC while CSC
LLC was endeavoring to meet the burial depth requirements. Nor would
the DEP permit CSC LLC to work to meet the burial depth requirement.
According to the DEP, the Connecticut legislative moratorium on agency
consideration of proposed crossings of Long Island Sound by utility
projects (including interstate transmission lines) prevents DEP from
allowing CSC LLC (by permit modification or by new permit) either to
continue working to meet the burial condition or to allow operation of
the CSC in its current location--effectively denying CSC LLC any
recourse to the gradual loss of its permit rights. The CSC had by this
time become a highly politicized project in Connecticut. As a result,
while construction was completed and there remained no substantive
objections to operation of the CSC, the CSC had not operated for an
entire year until directed to do so by DOE's post-blackout orders.
3. Chronology of Correspondence with DEP and Specific DEP Findings
On July 22, 2002, the DEP wrote to CSC LLC stating that while cable
system operation was not specifically within its jurisdiction, the
environmental impact of operation was within its jurisdiction. The DEP
therefore requested additional information about the environmental
impact of operation as installed. The DEP also confirmed that the cable
system's current location did not constitute a permit violation because
the permit's installation work period to achieve the authorized depth
had not yet expired (and does not expire until March 17, 2005). CSC LLC
responded to the DEP by letter dated July 24, 2002, with supporting
documentation demonstrating that operation at the current depth would
pose no adverse environmental or navigational risks.
On November 18, 2002, CSC LLC submitted a request to DEP to further
bury the cable system to the required depth in the several locations
within the Harbor where the cable system did not rest on rock, by using
alternate installation tools and methods. On December 23, 2002, the
Director of the DEP Office of Long Island Sound Programs (``OLISP'')
denied CSC LLC's request to further bury the cable system to the
permitted depth but responded to CSC LLC's July 24, 2002 report of no
impacts from operation in the current location. In its response, DEP
agreed with the demonstration in CSC LLC's July 24, 2002 letter with
respect to environmental impacts, and specifically that the
electromagnetic field (``EMF'') and temperature variations associated
with operation at the current depths ``would not be expected to impact
fisheries resources.'' The DEP stated that the permit depth requirement
was specified by the Army Corps as the requisite depth to accommodate
navigational concerns and deferred to the Army Corps regarding those
concerns.
On January 6, 2003 DEP wrote to CSC LLC that: ``[w]hile we may not
have any environmental concerns with the operation of the cable in its
current condition, we do have significant procedural concerns.'' The
DEP objected to operation during the time required for the CSC to reach
authorized depth in those limited areas where the cable system requires
further burial. The DEP's objection is based on its interpretation of
the depth requirement of its permit as prohibiting operation of the
cable system at any other depth, notwithstanding the absence of
environmental harm from operation. The DEP referred to this barrier to
operation of the cable system in its current location as a
``procedural'' obstacle to operation and has informed CSC LLC that a
new permit would be needed in order for CSC LLC to operate before
further burial work is performed. Furthermore, under Connecticut's
moratorium, DEP is precluded from considering any new permits for
energy projects crossing Long Island Sound.
B. Post-Installation Monitoring Studies Indicate No Significant Impact
Pursuant to the conditions of state and federal permits for the
CSC, a survey program was developed to monitor the sea bottom under New
Haven Harbor and Long Island Sound in connection with the cable
system's operation. Survey procedures were developed in conjunction
with the Army Corps, DEP, the National Marine Fisheries Service, and
the Connecticut Bureau of Aquaculture. The program consists of four
monitoring surveys, at 6 months, 12 months, 18 months and 30 months
after initial cable system installation in May 2002. The first two
surveys, conducted in fall 2002 and spring 2003, were reviewed by
Charles H. Evans, the Director of DEP's Office of Long Island Sound
Programs, who stated: ``what we are seeing is within the range we had
expected, which are really very minor effects.'' 5
---------------------------------------------------------------------------
\5\ ``Cross-Sound Cable Effects Unclear'', Hartford Courant Online
(ctnow.com), November 22, 2003.
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The 18-month survey, conducted in November and December 2003, was
the first survey performed during cable system operation. The report
with the results of this survey is attached to my testimony as Exhibit
JAD-4. This report concludes that the installation and operation of the
CSC has resulted in only minor and short-term effects on bottom-
dwelling organisms. More specifically, the recently released report
includes scientific data and analysis demonstrating that:
Cable system installation effects to living organisms within the Long
Island Sound seabed and floor of the New Haven Harbor Federal
Navigation Channel (``benthic habitats'') have been short-term
and very minor;
Benthic habitats in many places within the cableway have returned to
the same conditions observed prior to cable system laying;
There are no significant differences between seabed images of benthic
habitats located within and outside the cable system embedment
area;
The six benthic habitats detected during the pre-installation surveys
within the five study areas continue to exist with no
significant changes;
The single area of actively farmed shellfish beds traversed by the
cable system (for a length of 707 feet) continues to
demonstrate high benthic quality;
The variation of measured magnetic fields with the CSC operating has
remained the same since the initial pre-installation monitoring
survey; and
There is no evidence to suggest that the presence of the cable system
will affect commercial vessel navigation on the water surface
since there has been no detectable change in the compass
measurements collected.
A May 13, 2004 study released by the Bureau of Aquaculture of the
Connecticut Department of Agriculture summarizes their pre- and post-
installation shellfish analysis program within New Haven Harbor. The
Bureau of Aquaculture report suggests that the cable system
installation, among other possible sources during the same time period
such as effects from parasites or shellfish spawning processes,
potentially affected some of the sampling population. Post-installation
samples also indicate that these effects have since subsided. The
report does not take into consideration, however, the significant
effects of sediment dispersed by the first stage (Winter 2002-2003) of
the major maintenance dredging project conducted by the Army Corps that
took place between the Bureau of Aquaculture's sampling stages. This
Bureau of Aquaculture report, along with the benthic monitoring
studies, further confirms that the effects of the cable system
installation have been minor and short-lived.
C. New Haven Harbor Maintenance Dredging Completed over Cable System
Further evidence of the CSC's lack of impact on navigational needs
in New Haven Harbor is provided by the Army Corps' recently completed
maintenance dredging of the Federal Channel, the first such dredging
performed in over a decade. This dredge project took place in stages
over the past two winters and required the mechanical dredging of over
650,000 cubic yards of sediment from the Federal Channel and its side
slopes. At the same time, several facilities along the harbor coastline
are dredging out their berths to remove another 80,000 cubic yards of
sediment.
CSC LLC worked very closely with the Army Corps while dredging
activities were accomplished near and directly above the cable system
in several locations, including dredging over the section of cable
resting atop unforeseen bedrock. At no time did the cable system pose
an obstacle to the dredging, or prevent authorized channel depths from
being restored. While this dredging took place, the CSC was fully
available and continued to operate under the direction of ISO-New
England. CSC LLC appreciated the opportunity to contribute to this
successful Army Corps dredge project, and is pleased with the
confirmation that the cable system poses no impediment to the
maintenance of this important shipping lane.
According to the Army Corps permit application to the DEP, dredging
the Federal Channel affected approximately 157 acres of the harbor
bottom. By way of comparison, that area is thirty-one times greater
than the approximate 5 total acres affected by installation of the
cable system. In addition to the much smaller area of impact,
installation of the CSC's cable system was performed by means of a
minimally intrusive low-impact water jetting tool, which placed the
cable system to an average depth of over 10--feet beneath the channel
seabed, rather than a mechanical dredge using a large clamshell bucket.
VI. CONNECTICUT'S ``CATCH-22'' EFFECTIVELY BLOCKS OPERATION OF THE CSC
WITHOUT REGARD TO THE PROJECT'S SUBSTANTIAL BENEFITS, LACK OF IMPACTS,
AND CSC LLC'S RIGHTS UNDER THE PROJECT'S PERMITS
A. CSC LLC Has Made Repeated Requests to DEP to Either Further Bury or
Operate the CSC
CSC LLC has submitted five (5) separate proposals to DEP to either
bury the cable to its permitted depth or operate the CSC in its current
location with no environmental impact. Despite acknowledging the lack
of environmental impacts from operation, DEP has refused to let CSC LLC
either bury the cable system deeper or operate, thus creating the
classic ``Catch 22'' situation in which CSC LLC finds itself, as
outlined below. Connecticut enacted legislation specifically targeted
to prevent CSC from complying with its permits and block the Project
from operating. While preventing CSC LLC from complying with or seeking
waiver from its permits, Connecticut contemporaneously authorized a
major dredging project in the same harbor (New Haven) with
exponentially larger environmental impacts, and supports a plan to dump
dredge spoils in Long Island Sound.
1. Connecticut's Moratorium on Energy Projects Crossing Long Island
Sound
In the spring of 2002, while the Connecticut Attorney General's
appeal of the Siting Council approval of the CSC was pending (and
ultimately dismissed), the Connecticut legislature passed Public Act
02-7 (``P.A. 02-7''), which enacted a moratorium on the consideration
of new applications for electric transmission cables and gas pipelines
crossing the Sound and, moreover, retroactively voided permits already
granted for electric transmission cables (but not gas pipelines) that
had not yet been installed--which was Cross Sound Cable's situation at
that time. The class of entities affected by the retroactive provision
was a class of one: Cross Sound Cable. The Governor of Connecticut
vetoed P.A. 02-7 on April 19, 2002, recognizing in his formal veto
message the grave constitutional infirmities of ``unfairly penaliz[ing]
a company that has followed the [agency approval] process set up by the
General Assembly.'' (April 19, 2002 veto message at 2.) The legislature
sustained the veto on April 24, 2002.
The legislature then revised the vetoed act and passed a new bill,
now Public Act 02-95 (``P.A. 02-95'' or the ``Moratorium Law''). The
Governor signed P.A. 02-95 on June 3, 2002, and the law went into
effect on that date, after CSC LLC had obtained all necessary permits
to install and operate the cable, and after its initial burial of the
cable was completed on May 28, 2002. The Moratorium Law forbade state
agencies from ``consider[ing] or render[ing] a final decision for any
applications relating to electric power line crossings, gas pipeline
crossings or telecommunications crossings of Long Island Sound'' for
one year from the effective date of the statute, during which period a
task force was to complete a comprehensive environmental assessment and
plan. The law provided that after the task force completed its work,
``[a]ny application for an electric power line . . . crossing of Long
Island Sound that is considered by any state agency'' is to be
additionally evaluated based on the results of the task force's study.
The task force released its report on June 3, 2003--the day the
moratorium was set to expire.
On June 26, 2003, Connecticut enacted legislation that extended the
original one-year duration of the moratorium another full year to June
2004. In September 2003, subsequent to the energization of the CSC
pursuant to the Secretary of Energy's orders after the August 14, 2003
blackout, Connecticut Governor Rowland called for an evaluation of the
impacts of operating the CSC in its present location. DEP responded on
October 31, 2003 by issuing a request for proposals from consulting
firms to provide an evaluation of the impacts of operating the CSC in
its present location. The deadline for responses to this solicitation
was December 2003; however, to our knowledge DEP has yet to select a
consultant to perform this evaluation.
Finally, just this month (May 5), the Connecticut legislature again
extended the moratorium by another full year, to June 2005. The
Connecticut legislature approved extension of the moratorium is spite
of the opposition from both the DEP and the Connecticut Department of
Public Utility Control (``DPUC''). In testifying on the effects of
extending the moratorium on March 12, 2004, DEP Commissioner Rocque
indicated that as both Chairman of the Connecticut Energy Advisory
Board (``CEAB'') and DEP Commissioner, both DEP and CEAB opposed
extension of the moratorium. Chairman Downes of the DPUC further
testified:
I'd like to stress to you in the strongest possible terms
that a continuing moratorium here is--has very bad effects, it
has immediately bad electrical effects, it has immediately bad
financial effects, and over the long term, we'll lose any
opportunity at all to control these issues.
(Transcript of March 12, 2004 public hearing before the Environment
Committee of the Connecticut General Assembly, page 16.)
2. CSC LLC's Petitions to DEP
The permits issued by the DEP and the Army Corps grant CSC LLC a
period of time to complete installation work. CSC LLC has submitted a
total of five separate requests to either perform further burial work
or operate the CSC in its present location. DEP has rejected four of
these petitions, and has not acted on CSC LLC's fifth request for
almost one year.
REQUEST #1: On November 18, 2002, CSC LLC submitted a request to DEP
to bury the cable to the required depth in the several
locations within the Federal Channel where the cable system did
not rest on bedrock, using installation techniques appropriate
for those locations. In its letters dated December 23, 2002 and
January 6, 2003, the DEP interpreted the Moratorium Law as
prohibiting the agency from issuing a decision on an
application to modify the permit conditions. On January 6, 2003
DEP reiterated that ``[w]hile we may not have any environmental
concerns with the operation of the cable in its current
condition, we do have significant procedural concerns.''
REQUEST #2: On January 15, 2003, CSC LLC filed a request with the DEP
to modify its DEP permit to allow operation of the cable in its
current location without any additional environmental impact
from further construction or from cable operation, while CSC
LLC completed a work plan and obtained necessary authorizations
to reach the required burial depth during the life of the
permit. That modification would harmonize the permit with the
position of the Army Corps, which had stated no objection to
operation in these circumstances. While CSC LLC believed that
the DEP could grant this request under the existing permit
terms, without applying for a certificate of permission
(``COP''), CSC LLC included with its request the forms to
obtain a COP under Conn. Gen. Stat. 22a-363b, which, among
other things, allows the DEP to approve ``minor alterations or
amendments to permitted activities consistent with the original
permit.'' DEP again rejected CSC LLC's request by issuing a
letter on January 17, 2003 stating that a COP would be needed
for CSC LLC to obtain the requested permit modification but
that the Moratorium Law prevented the DEP from considering or
deciding the merits of an application for a COP relating to a
utility crossing of the Long Island Sound.
REQUEST #3: On May 23, 2003, CSC LLC filed a new request with DEP to
modify its permit to allow operation at the current burial
depth while CSC LLC worked with DEP and the Army Corps to
address the permanent burial depth requirements. On June 2,
2003, on the day before the first moratorium expired, DEP
notified CSC LLC that it could not consider this application,
citing the first Connecticut moratorium and imminent enactment
of the second moratorium. On June 11, 2003, just after
expiration of the first moratorium and before enactment of the
second moratorium, DEP denied this application on the grounds
that operation of the CSC as is, even without any further
environmental impacts, could not be considered a ``minor
alteration'' of the original permit.
REQUEST #4: On June 10, 2003, upon expiration of the first
Connecticut moratorium, CSC LLC filed a new request to DEP to
modify its permit to allow operation of the CSC while CSC LLC
continued to work with DEP and the Army Corps regarding the
burial depth issue. On June 13, 2003, just after expiration of
the first moratorium and before enactment of the second
moratorium, DEP denied this request on the grounds that
operation of the CSC as is, without any further environmental
impacts, still could not be considered a ``minor alteration''
of the original permit--despite expiration of the first
moratorium.
REQUEST #5: Finally, on June 12, 2003, in response to DEP's
suggestions in its rejection of CSC LLC's May 23rd application
(Request #3 above), CSC LLC filed a new permit application with
DEP to allow operation of the CSC until December 31, 2007,
while CSC LLC continued to work with DEP and the Army Corps
regarding the burial depth issue. DEP has acknowledged receipt
of this application but to date has taken no action, a period
of almost one full year.
This continued pattern of rejection and delay by DEP demonstrates
that CSC LLC is simply not being afforded a fair opportunity to either
further bury the cable system or demonstrate that a waiver of the
burial condition, and allowing operation ``as is where is,'' creates no
impact to the environment or navigation.
VII. CONCLUSION
CSC LLC was surprised with Secretary Abraham's decision to rescind
his order authorizing operation of the Cross Sound Cable. As a result,
the CSC's many benefits to Connecticut, New York, and the region are no
longer being realized. The substantial economic benefits and improved
reliability provided by the CSC come at no cost to Connecticut and
without any harm to the environment or threat to navigation in New
Haven harbor or elsewhere in Long Island Sound. Instead of enjoying the
CSC's benefits to Connecticut, Connecticut insists on maintaining a
``Catch-22'' under which Connecticut precludes operation of the CSC on
the grounds that certain permit conditions have not been met (despite
acknowledging the lack of impacts from operation) while at the same
time refusing to consider CSC LLC's requests to either comply with or
waive the subject permit conditions. I respectfully urge the
Subcommittee to address this situation by approving legislation that
allows the CSC to resume full commercial operation and provide its
substantial benefits to Connecticut, New York and the Northeast.
Mr. Hall. Thank you.
Mr. Kessel, purchaser of power, we recognize you for 5
minutes.
STATEMENT OF RICHARD KESSEL
Mr. Kessel. Thank you, Mr. Chairman. And we thank you on
behalf of not just Long Island Power Authority and our
customers, but also on behalf of Governor Pataki for taking the
time to look at an issue which I think we all recognize is an
issue that is not confined to New York and Connecticut, but a
national issue.
It seems that we have all forgotten the blackout of last
summer when the Northeast and parts of Canada experienced the
greatest power failure in our history. And in an environment
when we are less than a year from that blackout, and an
environment where terrorism has constantly reminded us about
the infrastructure and the vulnerability of the infrastructure,
and threats against the electric grid is one of them, to allow
a perfectly normal transmission line to lie not used at the
bottom of the Long Island Sound is absolutely preposterous and
is really parochial politics and nothing more. That is what
this issue is all about.
And in listening to the testimony, I think it is important
to make some critical points here. No. 1, this is not about a
cable being illegal. The opposition from my friend, the
Attorney General Blumenthal in Connecticut, and others appeared
before the cable was even built. This is not about the
permitting conditions. This is really about parochialism and
false environmentalism. I think there is no one who has a
better record on environmental protection than our State, New
York State, under the leadership of Governor Pataki.
I think it is important to just go through the arguments
that have been made by Attorney General Blumenthal and others
in Connecticut and point out the hypocrisy of some of them. The
environmental argument--there is no environmental harm from
that cable. That cable has operated, thanks to the Department
of Energy's emergency order, since last August and was only
recently shut down. And I have challenged the State of
Connecticut and the Attorney General to show what environmental
or navigational harm that cable has created in the 8 or 9
months that it has operated. It hasn't created any
environmental harm whatsoever.
I thought, since we have been talking about it all morning,
that I would bring several sections of the cable, and I would
like to share this with the committee. If this could be put in
the record, I think it should, because this is what we are
talking about. So maybe we can pass this up in some way, and
you can take a look at the cable yourself.
And I would also like to give a piece of the cable to my
friend Attorney General Blumenthal. I would like him----
Mr. Blumenthal. I have received it before. So this kind of
gamesmanship is what it is.
Mr. Kessel. It is not gamesmanship. This is the cable, Mr.
Attorney General. I would like you to show us after my time
period is up, based upon the fact that this is solid in nature,
can't leak at all, I would like you to show us with this piece
of cable what the environmental harm is as compared to the
dumping of dredging materials that you are silent about from
the State of Connecticut. When there is an environmental issue
that impacts the State of Connecticut you are strangely silent,
but when it is an environmental issue regarding the Cross-Sound
Cable, you lead the charge.
As I indicated the other day, I challenge you to create the
same opposition to the dumping of sludge, which takes up
approximately 4\1/2\ square miles of the Long Island Sound as
opposed to the .027 square miles that are impacted by the
faults in the cable. Either you love the Long Island Sound and
you care for it, or you don't. Your silence, frankly, on the
dumping of sludge in light of your opposition to the cable,
frankly, to me is astonishing. There is no environmental damage
to the sound. And that is not just something that we are making
up here, but it has been found not only by New York and
Connecticut, by the Army Corps of Engineers and everyone else.
There are no environmental problems. There are no navigational
problems.
Second of all, I constantly hear that Long Island hasn't
done anything. Well, that is not true. As the chairman of the
Long Island Power Authority, I can tell you that we have
installed 50 new small power plants across our service
territory over the last 3 years, equating to 600 megawatts of
new on-island generation. Additionally, we have spent between
$35 and $40 million a year on energy efficiency and demand-side
reduction programs, and next week we will be announcing a long-
term energy plan to add 1,000 megawatts of new electricity for
Long Island over the next 7 to 10 years.
I think it is important to note that when you look at what
Connecticut has added and subtracted to its energy supply, it
is less than what we have done on Long Island in the last 10
years. In fact, since 1994 through 2004, Connecticut, net--when
I say net, that is adding and subtracting, because they have
decommissioned a number of plants in Connecticut--the net added
impact of megawatts in the entire State of Connecticut is 621
megawatts. Our additions on Long Island net 863 megawatts. So
when you talk about Long Island not doing anything for itself,
the bottom line is that Long Island has added more megawatts
than the entire State of Connecticut combined in the last 10
years.
Finally, the issue of rates going up is just a specious
argument. The fact is that the Cross-Sound Cable would not just
benefit Long Island, but would benefit Connecticut, and
particularly southwest Connecticut where there is a tremendous
congestion problem.
We have already indicated, Mr. Chairman, that we could take
electricity from Connecticut, bring it down the Cross-Sound
Cable, across Long Island, and up the 1385 line that Attorney
General Blumenthal mentioned into southwest Connecticut. That
would not only help in the event of potential problems this
summer, which everyone recognizes could occur, but also would
reduce congestion charges in that part of the State and
ultimately, obviously, benefit the people of Connecticut.
So let me conclude by urging this committee that you must
get involved. The Cross-Sound Cable is a symbol of what is
wrong in this country, with the reliability of the electric
grid. It shouldn't have to take another blackout for us to
remind ourselves of what happened last summer and of what
customers go through whether they are in Connecticut, Long
Island or California when the lights go out. So I urge
congressional action on this matter, quickly and appropriately,
in time for the summer season. Thank you.
[The prepared statement of Richard Kessel follows:]
Prepared Statement of Richard Kessel, Chairman and Chief Executive
Officer, Long Island Power Authority
My name is Richard M. Kessel and I serve as Chairman of the Board
and Chief Executive Officer of Long Island Power Authority (LIPA)
located on Long Island in New York State. As an instrumentality of the
State of New York and a public power agency, the Authority and its
operating subsidiary, provide electric service to nearly 1.1 million
customers, representing approximately 2.8 million people in Nassau and
Suffolk counties, and the Rockaway Peninsula in the Borough of Queens,
New York City.
I am here today to deliver the message that electricity must flow
freely on the interconnected interstate transmission grid, not only to
benefit Long Island and New York, but Connecticut and New England as
well. Every region of the country needs to provide the resources
required to meet the needs of our citizens for electric energy. Those
resources include generation from renewable and non-renewable
resources, conservation and sustainable sources. However, no region of
this country can develop and sustain those resources and meet those
needs in isolation. The strength of our nation's system has been the
interconnected grid and the sharing of resources for the common good of
all. New York and greater New England believe that we should be
supporting each other as the hot summer weather approaches and the
Cross Sound Cable is an essential element of that support.
I want to thank Chairman Hall for calling this hearing and for
providing me with the opportunity to testify. I also would like to
thank the Chairman of the full Committee, Chairman Barton, for his
leadership on the issues facing our electric transmission system and
overall reliability and his continuing interest in the Cross Sound
Cable.
THE BLACKOUT OF 2003--LIPA'S RESPONSE AND THE ENERGIZING OF THE CROSS
SOUND CABLE
Last summer LIPA and its customers were caught up in the Northeast
power blackout, which affected much of the Northeast United States and
Southeastern Canada. Through the cooperation of LIPA's customers, who
limited their demand, and the committed work of the employees of LIPA
and our service contractor, KeySpan, over 80% of LIPA's customers had
their power restored by 8:30 A.M. on August 15th, and all customers had
electric service restored within 25 hours, 21 minutes of the blackout.
That restoration was expedited by the energization of the Cross Sound
Cable on the night of August 14 and 15 pursuant to the emergency order
issued by the Department of Energy. Governor Pataki's initiative in
requesting that emergency order was met with immediate response by the
Department of Energy. The Cross Sound Cable not only provided for the
delivery of electric power to Long Island, it helped prevent the type
of re-occurring rolling blackouts on August 15th that is often typical
of restoration of service after a widespread outage.
It was unfortunate that the Cable was not in service on August 14,
2003, as it might have helped ameliorate the extent of the outage on
Long Island and played in a role in restoring service even faster.
In the aftermath of the Blackout and the uncertainty about its
causes or possible recurrence, the Secretary issued a second order on
August 28, 2003 that recognized that the emergency situation caused by
shortages of power generation, transmission and distribution facilities
continued to exist, and directed the continued operation of the Cross
Sound Cable until such time the emergency was over.1 The
benefits of that order have been proven in the following nine months of
operation, not only because of the electric energy transmitted between
Long Island and Connecticut but also because the Cable has been called
upon more than one hundred times to meet critical reliability needs. In
fact, the Cable was called upon for stability purposes more often in
New England than in New York.
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\1\ In his August 28 Order, the Secretary stated that ``an
emergency continues to exist in the Northeast United States due to a
shortage of electric energy, a shortage of facilities for the
generation of electric energy, a shortage of facilities for the
transmission of electric energy and other causes.''
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In short, there was a lack of necessary resources in the region
that could ensure the safe and reliable delivery of power in the
northeast U.S. This was the underlying emergency addressed by the
Secretary. From August 15, 2003 until May 7, 2004, the Cross Sound
Cable operated under the Secretary's emergency order. Unfortunately, on
May 7th, the Secretary rescinded his emergency order without notice.
This decision will have significant negative impacts on the reliability
and supply of electricity on Long Island, in Connecticut and throughout
the region. While the blackout was a singular unprecedented event, the
fact remains that our national electric transmission system needs
significant improvement, and that we need to continue our efforts to
enhance system reliability by expanding and improving the transmission
system capabilities and interconnections.
Despite the significant growth in resources over the last six
years, the Cable is an essential part of Long Island's resource
picture. LIPA is taking aggressive steps to maintain and enhance the
electrical system on Long Island. However, ultimately, the answer is
clear--we need the Cross Sound Cable operating today and in the future.
Electricity is supposed to be a fungible interstate commodity. The
electricity grid does not recognize ``Connecticut electrons'' or ``New
York electrons.'' Electricity is supposed to flow over the interstate
electric grid without regard to political boundaries. That is not what
is happening here and, as a result, this situation is a poster child
for federal intervention.
I refer you to my testimony of September 4, 2003 for a history of
the development of the Cross Sound Cable. Mr. Donahue's testimony today
also describes the Cable in great detail, including the reliability
benefits it provided during the term of the recently expired emergency
order. Needless to say, the short operating history of the Cable during
the Emergency Order more than justified LIPA's vision when it
commissioned a study of the project for benefits to both Long Island
and New England.
Congress has recognized that the Cross Sound Cable is an essential
component in the Northeast transmission grid by including in H.R. 6,
the Energy Policy Act of 2003, a provision that would require the Cross
Sound Cable to remain energized until Congress determines that it
should be shut down. While that legislation remains in an uncertain
state in the Senate, we believe this is sound policy.
LIPA--PROVIDING RELIABLE ELECTRIC SERVICE AND INVESTING IN
INFRASTRUCTURE
We at LIPA are committed to doing whatever we can to create more
stability in the transmission grid and provide reliable service to the
people of the Northeast. The Authority and its operating subsidiary,
LIPA, own and operate the transmission and distribution system on Long
Island while also providing retail electric service to customers on
Long Island. LIPA was established in 1986 by the New York State
legislature to resolve a controversy over the Shoreham Nuclear Power
Plant and to achieve lower utility rates on Long Island. Created as a
corporate municipal instrumentality of the State of New York, the
Authority was authorized under its enabling statute to acquire all or
any part of the securities or assets of the Long Island Lighting
Company (LILCO). In May 1998, thanks to the leadership of Governor
Pataki, the Authority acquired LILCO as an operating subsidiary. This
acquisition resulted in an average across-the board rate reduction of
20% to the LIPA's customers in Nassau and Suffolk counties, and the
Rockaway Peninsula in Queens.
LIPA owns 1,344 miles of transmission and sub-transmission lines
that deliver power to 175 substations in its electric system. From
these substations, 13,075 circuit miles of distribution lines deliver
the power to nearly 1.1 million business and residential customers, or
a population base of nearly three million people.
On average, for the past several years, our peak demand has grown
at a rate of approximately 100 megawatts (MW) per year. On a per-
household basis, average residential consumption has increased 14% over
the last five years, despite LIPA's varied and aggressive conservation
and energy efficiency programs. The 2004 peak load forecast, approved
by the NYISO for the Long Island Control Area (which includes both LIPA
load and resources, load served by municipal utilities and generation
resources not under contract to LIPA) is 5062 MW. The supply available
to Long Island from generating resources on the island and the Y-49 and
Y-50 cables is 5083 MW (measured in terms of installed capacity). The
5062 MW load forecast assumes ``normal'' weather conditions. LIPA's
record summer peak, set on July 29, 2002, is 5059 MW. If the summer of
2004 proves to be as warm as 2002, the peak load is forecast at 5219
MW, an increase in the peak of 160 MW over 2002. In fact, if the
extreme weather conditions (97F and THI in excess of 83, fifth
consecutive day of heat) that occurred in early July 1999 were to occur
during the summer of 2004, a peak of over 5700 MW is expected. While
load reduction programs may reduce this number by 100 MW, at this load
level, extreme emergency measures will be required. It is informative
to note that the actual July 1999 peak is no longer among the 15
highest Long Island summer peaks. The conditions discussed above would
eliminate any reserve margin even assuming, unrealistically, that all
equipment is available.
In order to maintain reliability and serve this growing market,
LIPA has invested heavily in transmission infrastructure over the past
six years, and will continue to do so. Since 1988, LIPA has invested
$1.01 billion in our transmission and distribution (T&D) system. We
have invested in a wide range of projects including new transmission
and distribution lines, upgrades of existing lines, new substations,
and improvements to existing substations. In addition, LIPA worked to
establish a new interconnection between New York and New England across
Long Island Sound--which ultimately became the Cross Sound Cable
project. LIPA believed, and continues to believe, that development of
this interconnection is essential to the reliability of Long Island and
the inter-related region. I will not go in to greater detail on all of
LIPA's investments and initiatives targeted at increasing reliability
of the electric transmission grid now, but will refer you to my
testimony given to the full House Energy and Commerce Committee on
September 4, 2003.
To address future needs and growth of this area, LIPA has developed
and issued a Draft Energy Plan for Long Island. LIPA is recognized as a
leader in conservation and efficiency measures--promoting conservation,
installing of new energy efficient lighting and appliances, and using
energy efficient technologies and renewables such as geothermal heat
pumps and photovoltaics--with the implementation of a five-year, $170
million Clean Energy Initiative. However, even with all of these
efforts, it is not possible to meet all of our load requirements
without a key component of our strategic plan--the Cross Sound Cable.
Officials in the State of Connecticut have argued that Long Island
should develop additional generation resources and not rely on the
Cross Sound Cable to ``import'' the energy it needs. LIPA continues to
explore the building of new generation and has added 600 MW of new
generation over the last three years. LIPA remains committed to
installation of new generation resource, including renewables. However,
it bears noting that there are challenges to building new gas fired
generation on Long Island, due to constraints in the supply of natural
gas to the region. Ironically, the State of Connecticut has also
stymied the development of a natural gas pipeline across Long Island
Sound which would address this issue and bring needed supplies of
natural gas to Long Island.
Moreover, new generating facilities cannot be simply purchased off
the shelf and installed overnight. LIPA has purchased mobile emergency
generation for each of the last three summers in an effort to meet our
load requirements. This demonstrates the dire situation that exists on
Long Island. LIPA has moved as quickly as possible to secure new
generation resources consistent with statutory and regulatory
restrictions, its obligations for environmental protection and the
needs of its consumers. In May and June of this year, the LIPA Board is
expected to act on the results of several RFPs that will result in
substantially more capacity over the next few years. Despite LIPA's
best efforts, however, the reality is that LIPA is in functionally the
same position as it has been over the few Summers. The Cross Sound
Cable has been an important part of LIPA's resource plans. LIPA had
planned and contracted for the Cable to meet the projected summer 2002
load. Through the Cross Sound Cable, LIPA anticipated purchasing the
output from among the new large and efficient generating facilities
that have come on line in New England. Conversely, LIPA assumed that
the Cable would be available as well to meet electric demand needs in
the high growth transmission constrained area of Southwest Connecticut
around New Haven.
Despite our best efforts, it has not been possible to obtain
sufficient generation or load reduction resources to meet the resources
gap that DOE acknowledged in 2002. LIPA again faces the prospect of
razor-thin reserves during heavy load conditions this summer because of
the unavailability of the 330 MW Cross Sound Cable. As noted above,
even with aggressive load reduction and conservation measures in place,
the demand on Long Island continues to grow. Our planning and growth
forecasts have been built on the availability of this essential
transmission line and it is critical for the reliable service to the
region. Any number of factors could severely affect the ability to meet
demand on Long Island this summer. Our generation is aging and, in the
summers of 2002 and 2003, we were fortunate to have 95% of the capacity
available. However, historically, one can only rely on 90% of that
generation--at most. Without the ability to use the Cross Sound Cable,
the outage of one major generating unit could lead to blackout
conditions. Weather is another unpredictable factor and if we were to
have conditions similar to 1999, our peak load on Long Island will be
13% higher than we are currently projecting. (Current projections for
this summer are 4910 MW. Under conditions similar to 1999, our peak
would be 5551 MW). Without the Cross Sound Cable, there are very thin
margins for being able to meet our load without having to resort to
load shedding.
EMERGENCY USE OF THE CROSS SOUND CABLE
The Cross-Sound Cable has been able to provide significant support
for the Connecticut and Long Island regions through the emergency
orders issued by DOE. The summer of 2002 was consistently hotter than
previous summers. In fact, LIPA experienced two all-time peaks in July
2002. Faced with extreme demands on the system and Connecticut's
prevention of commercial operations the Cross Sound Cable, LIPA took
the initiative to request an emergency order from the Department of
Energy under Section 202(c) of the Federal Power Act. The Secretary of
Energy has been given authority, under Section 202(c) of the Federal
Power Act, when an ``emergency exists by reason of a sudden increase in
the demand for electric energy, or a shortage of electric energy or of
facilities for the generation or transmission of electric energy,'' to
``require by order such temporary connections of facilities and such
generation, delivery, interchange, or transmission of electric energy
as in its judgment will best meet the emergency and serve the public
interest.'' The Department of Energy issued such order to energize the
Cross-Sound Cable on August 16, 2002, allowing it to operate through
October 1 (the end of the summer). Connecticut opposed that action.
At the beginning of Summer 2003, the Cross Sound Cable again was
rendered inactive due to the Connecticut moratorium and the Connecticut
DEP's actions. However, on August 15, 2003, as a result of the evident
emergency facing the Northeast due the Northeast blackout, LIPA
received notice from the Department of Energy that Secretary Abraham,
acting upon a request from New York's Governor George Pataki, had
issued an emergency order immediately directing the operation of the
Cross-Sound Cable pursuant to Section 202(c) of the Federal Power Act.
Once active, the Cross Sound Cable provided essential electricity to
Long Island and helped stabilize voltage on both Long Island and in
Connecticut. The Cross Sound Cable transmitted 15,000 megawatt-hours of
electricity over the critical three-day restoration period following
August 14, enough to repower approximately 300,000 homes on Long
Island.
That order was, initially, of a two-week duration. However, on
August 28th, the Secretary of Energy issued an order determining that
emergency conditions continue to exist ``due to a shortage of electric
energy, a shortage of facilities for the generation of electric energy,
a shortage of facilities for the transmission of electric energy and
other causes.'' Accordingly, the August 28th Order directed that the
Cross Sound Cable remain energized to facilitate transfer of power
between New York and New England (in both directions) and to provide
voltage support and stabilization facilities.
THE NEED FOR THE CROSS SOUND CABLE
The recent final report of the U.S.-Canada Task Force on the
Blackout confirms the need for the Cross Sound Cable. The blackout
report concludes that ``[r]eactive power problems were a significant
factor in the August 14 outage, and they were also important elements
in several of the earlier outages . . .'' During the August 14
blackout, the Cross Sound Cable provided critical reactive power to
Long Island and Connecticut to help stabilize the system.
Moreover, it is incontrovertible that in the time since the August
28 Order, an operational Cross-Sound Cable has helped ``prevent a
breakdown in electric supply'' in a region where a shortage of
transmission and generation facilities persists. The Cross Sound Cable
is frequently called upon to provide critical reactive power voltage
support in order to maintain operating voltages on the Connecticut
transmission system at the request of the New England Independent
System Operator. The Task Force Report highlights the importance of
this service stating that ``Reactive power problems were a significant
factor in the August 14 outage, and they were also important elements
in several of the earlier outages . . .'' 2 It went on to
recommend the strengthening of ``reactive power and voltage control
practices in all NERC [North American Reliability Council] regions.''
3 The Cross Sound Cable is currently the only operating
cable system in Connecticut and Long Island capable of providing
dynamic reactive power support during sensitive energy demand periods.
---------------------------------------------------------------------------
\2\ The Task Force Report at p. 160.
\3\ Id.
---------------------------------------------------------------------------
Since last August, the Cross Sound Cable has responded to 84
requests from Connecticut to maintain a steady operating voltage and 8
similar requests from New York. The cable has also responded 17 times
to reduce system disturbances caused by lightening strikes, transformer
failures, line faults, and unknown events. Nearly 80% of these
disturbances were on the Connecticut grid. As vividly demonstrated by
its reliable operation, the Cross Sound Cable not only provides
important reliability benefits to Long Island residents, but also
contributes directly to system reliability in Connecticut.
The high voltage, direct current, Cross Sound Cable can provide
valuable assistance in efforts to stem system disturbances similar to
those that occurred last August 14th and that caused blacked outs in
New York and on Long Island. Further, while we recognize the Cross
Sound Cable's contribution to removing emergency conditions, the
facility also should be placed into full commercial operation so it can
fully support and enhance the reliability of the adjoining New England
and New York control areas. LIPA's nearly 1.1 million customers
(serving nearly three million people), as well as the customers of
utilities in Connecticut benefit from the increased protection against
contingencies and outages afforded by the Cross Sound Cable. As the
August 28 Order noted, in the aftermath of the August 14th blackout,
the Cross Sound Cable not only helped deliver substantial amounts of
energy to Long Island, but also provided ``valuable voltage support and
stabilization services for the electric transmission systems in both
New England and New York.'' 4 These grid stabilization
services not only helped the system in the region to recover from the
blackout, but also prevented rolling blackouts in the aftermath of the
restoration of service, and increased the overall reliability of the
system.
---------------------------------------------------------------------------
\4\ August 28 Order at second paragraph.
---------------------------------------------------------------------------
We are grateful for the efforts of the New York Congressional
delegation and Governor Pataki. Legislation has been introduced in both
the House and in the Senate designed to keep the Cross Sound Cable
energized. LIPA strongly urges Congress to ensure the optimization and
full utilization of existing regional transmission assets such as the
Cross Sound Cable.
Again, I thank the Committee for this opportunity to testify and
for your interest in the Cross Sound Cable. LIPA looks forward to
working with Chairman Hall and all members of this subcommittee on
creating a solution that will enhance the reliability of our electric
transmission and distribution systems and ensure the continued
operation of the Cross Sound Cable.
Mr. Hall. All right. Thank you very much Mr. Kessel.
I would like to--I am kind of in a dilemma. Attorney
general says this cable is illegal. Officials in Connecticut
have determined that they are not going to authorize the use of
the cable unless it is buried deeper in a few locations. Rock
and other barriers are obstructing a deeper depth, I guess.
However, right at that time, Mr. Kessel, when they hit the
rock--I am building a swimming pool at home. I am repairing an
old swimming pool, and I had to go redo it to go to city
plumbing. I had to dig a ditch. I got the cheapest ditch digger
I could get, and he dug a ditch as deep as he could get it, and
it was not deep enough because he hit rock. I live in a place
called Rock Wall, and there is a rock wall around the--rock
wall around the city. Manmade or whatever, nobody has ever
decided, but we hit rock. I had to get heavier equipment.
Was there any heavier equipment that could have dug this to
that depth and not have this dilemma of the rock that precluded
that? Mr. Donahue.
Mr. Donahue. I would like to answer that. Yes, if we knew
the rock that was there----
Mr. Hall. I am not criticizing that you didn't--apparently
you didn't think----
Mr. Donahue. There was equipment and technology that can
dig through the rock. I would like to mention, too, we hear a
lot about the rock, this rock, this rock that the Corps didn't
know about either, by the way. And we have heard a lot about
the expansion of the channel. There are ways to remove the
rock. If we have to get our cable down and remove the rock, we
will. It is about 4,000 square feet of area would have to be
cleared.
If in the future the Federal navigational channel is ever
expanded, if it is, they are going to have to remove all the
rock around us, over 130,000 square feet of rock, also in the
future. We have agreed that if the channel is ever expanded, we
will move the cable. There is technology out there. It will
have to be used. If we have to lower our cable, it will have to
be used if the channel is expanded.
We think it is smart to leave the cable as is, whereas only
have the environmental impact of doing that actually once. When
and if the future channel is expanded----
Mr. Hall. Well, so there could be more construction is what
you are saying.
Mr. Donahue. Oh, yeah. Yeah, absolutely.
Mr. Hall. You get another situation here where the same
officials from Connecticut have created a moratorium on the
construction. So----
Mr. Blumenthal. May I respond to that? Let me just explain
about the moratorium. The moratorium dates from 2002, and it
was adopted because of the plethora of lines, not just this
cable, but literally a spaghetti of lines, pipelines for
natural gas, cable lines for electricity, that were proposed.
And what Connecticut said in effect was let's stop the
construction so that we can plan intelligently.
Mr. Hall. You all had that discussion.
Mr. Blumenthal. Now, the moratorium which has been
extended to 2005 has a procedure which Cross-Sound could use to
receive approval to go ahead. There is a waiver procedure. The
moratorium is a red herring, if you will. A red herring, by the
way, is not indigenous to the Sound. The dredge disposal issue
is a red herring. I have said, and I will say again here, if it
is illegal, I will fight it. That has been a matter of public
record.
Mr. Hall. You say it is illegal. Your statement was it is
not legal.
Mr. Blumenthal. No, we are talking about the dredge
disposal that Mr. Kessel mentioned and----
Mr. Hall. I understood you to say that the cable is not
legal.
Mr. Blumenthal. The cable is illegal in its present form.
Mr. Hall. If it is illegal, it is not legal.
Mr. Blumenthal. That is right.
Mr. Hall. As the attorney for the State, what are you doing
to make it legal?
Mr. Blumenthal. Well, I can't make it legal, if you please,
Mr. Chairman. With all due respect, they have----
Mr. Hall. What of the moratorium? Does the moratorium
preclude that?
Mr. Blumenthal. No. The moratorium provides for an approval
procedure, an application procedure that they may avail
themselves to do, and it also would enable them to do, if they
could do, what has to be done to make the cable legal, but only
by blasting the bottom of the sound. And that is in violation
of their permit conditions which they have accepted. And so the
moratorium isn't the problem. It is their disregard for what
they knew was at the bottom of the sound.
The Army Corps of Engineers, contrary to what Mr. Donahue
is saying, had indications and information about this ledge.
There are memos in the Army Corps of Engineer's files, October
2000, that indicate this ledge is a problem, that rock is at
the bottom of the harbor.
We are not dealing with some exotic remote part of the
world that is unknown to us. New Haven Harbor has been well
navigated and known for a long time, and the existence of a
ledge there should have been no surprise through a substantial
part of the harbor.
Mr. Kessel. Mr. Chairman.
Mr. Hall. Mr. Kessel.
Mr. Kessel. I have to correct some things here. First of
all, it just surprises me that the issue on the sludge issue,
and it is not a red herring, it is a significant issue, it is
not just a legal issue, it is an environmental issue. The
Attorney General and others in Connecticut have used the
environmental issue for years in objecting to the cable. And
whether the sludge is dumping of sludge in the Long Island
Sound is legal or not, what about the environment?
You are the Attorney General that speaks up for the
environment all the time, and I am frankly surprised that you
won't stand up with the same veracity and strength that you
have used against the Cross-Sound Cable to say that as a
protector of the environment, that I am not going to sit idly
by and allow that sludge to be dumped.
Second of all--let me finish. And second of all, there is
a--the moratorium. There were three moratoriums that were
enacted. The last one was just recently enacted by the
legislature this year. All of the moratoriums up to this year
gave no opportunity for Cross-Sound Cable Transenergy to make
those repairs. The current moratorium does allow for certain
waivers and exceptions, but you have to go through such a
gauntlet that it is highly unlikely that could ever occur. So
while on the one hand the State of Connecticut says, you know,
it is not buried to the depth requirement--by the way, in no
areas of the Long Island Sound does that occur at all, in these
seven or eight small areas, and so it is illegal. Transenergy
cannot make the repairs even if they wanted to, because the
moratorium brings it to a time where no work can be done in the
Long Island Sound during the summer months.
So for all intents and purposes, if we were to follow the
Attorney General's reasoning here, we would not be able to use
the Cross-Sound Cable until at the very least the summer of
2006, and that just makes no sense to me. It is a Catch 22 of
the highest order.
Mr. Hall. I think my time is up. I recognize the gentleman
from Virginia.
Mr. Boucher. Well, thank you very much, Mr. Chairman. And I
want to thank all of the witnesses for their informative and
spirited testimony here this morning.
Mr. Wood, I have several questions for you. You reference
in your testimony that there is a class of cables that crosses
the sound that have been in place for something on the order of
30 years, and that there have been some problems in terms of
perhaps anchors from barges contacting these cables with the
release of chemicals that were a part of the cable. I think
benzene perhaps was released. Do you know if this particular
cable that we are discussing today, this Cross-Sound Cable, is
potentially subject to that kind of problem?
Mr. Wood. I don't know the engineering of it. I see the
cross-section as you do, and it doesn't look like there is a
liquid surrounder there, but I am not aware of the full
influence of that cable.
Mr. Boucher. Would other members of this panel care to
comment just very briefly on this, because we have some other
questions.
Mr. Donahue. Thank you, sir. I will comment briefly. The
1385 cable, as it is commonly known, the old cable, is using a
technology that uses oil fluids to help cool the cable. The
Cross-Sound Cable, as Mr. Kessel indicated, uses solid
dielectric, solid plastic, so there is no oil on this cable.
Second, the 1385 cable was not buried along its entire
length, and in the areas where it was buried, it was only
buried to a couple of feet. So it has experienced significant
problems over the years.
Mr. Boucher. Mr. Blumenthal, do you have a contrary opinion
to that?
Mr. Blumenthal. I do not. Our objection environmentally to
this cable is based on its effect on the aquatic life and the
ecosystems of the Sound, and on the fact that substantial
blasting, detonation in the seabed of the Sound would be
necessary to lay it at the proper depth.
Mr. Boucher. So the experience with the 1385 cables is
really not what gives rise to Connecticut's environmental
concerns at this point.
Mr. Blumenthal. It is not. In fact, on the contrary, sir,
the State of Connecticut has favored upgrading the 1385 line to
eliminate that problem so that there could be better
transmission. And, in fact, the 345 kV line would assist in
that transmission if necessary and appropriate from New York to
Connecticut or vice versa.
Mr. Boucher. Thank you very much.
Mr. Wood, let me return to you. In your testimony you
suggest that the Congress might want to consider a change in
the Department of Energy's authorities under section 202 that
currently enable the Department to order that certain
facilities be operated in the event of an emergency. And your
proposal, as I understand it, is that this DOE authority could
be exercised not just in emergencies, but when it is deemed to
be in the national interest to have certain facilities be
operated. Is that a Commission position that are you adopting?
Is that a formal recommendation you are making to us? Do you
have legislation to recommend to us along those lines?
Mr. Wood. It is my own recommendation in preparation for
this hearing, and reviewing the Secretary's order, the
limitations, as General Counsel Otis has pointed out, relate to
a specific factual finding of an emergency, and while that is
not defined, I think it is a significantly high standard that
would not include issues such as general reliability,
preparatory actions to take perhaps in advance of a high-
electricity useage summer. And so I think that the standards
should be made a little bit broader so that the Secretary would
have broader authority, but it is my own analysis of the
situation, my experience with the Federal Power Act, not that
of our Commission nor of the Secretary.
Mr. Boucher. Thank you.
Ms. Otis, does the Department of Energy have any comment on
this proposal?
Ms. Otis. Well, I feel as if I should at least return the
favor. I guess what I would point the subcommittee to are the
siting provisions in H.R. 6 currently, which actually would
give this override authority to the FERC in circumstances--in
appropriate circumstances, and I do think actually that the
circumstance that we have here is a potential candidate for the
use of that authority. Obviously no one would want to prejudge
whether it would, in fact, be appropriate to use it here, but I
think that this is a tool that might assist in resolving
disputes like this.
Mr. Boucher. Well, thank you very much. I will have to
confess that in 22 years here, I have never seen two agencies
try to hand each other authority quite the way that you have
today. Typically it is the reverse of that. But thank you for
your comments.
Well, let me ask you this, Mr. Wood. If Congress were to
adopt this recommendation and enable DOE to exercise this
authority when it is deemed to be in the public interest and
not necessarily in emergency situations, would I be correct in
interpreting the proposal to say that DOE's authority would
then be preemptive of both State and Federal environmental
laws, and that the operation of the facility could go forward
if DOE orders it, even though the Army Corps of Engineers, for
example, had found that permit conditions had not been met?
Mr. Wood. I think that the standard and the public interest
would have to govern, and I think that would be up to the
Secretary and/or the Commission, whoever has that authority, to
balance those very important determinations as to whether the
public interest requires those State and Federal environmental
laws to be overridden.
Mr. Boucher. Okay. Thank you.
One final question of you. I wonder if the operation of
this cable falls under the reliability guidelines that have
been published by the North American Reliability Council.
Mr. Wood. Are they subject to the----
Mr. Boucher. Are they subject to the reliability guidelines
published by NERC?
Mr. Wood. They should be. I think Mr. Museler might be
probably a better person to handle that one.
Mr. Boucher. Mr. Museler.
Mr. Museler. Yes, sir, they would be, and they are in the--
on the New York side that cable is--was included in the
reliability analysis for the summer of 2004 in accordance with
those guidelines, and I believe the same is true of the New
England Independent System Operator.
Mr. Boucher. Under current law those guidelines are
voluntary. They are not enforceable. We have provisions in H.R.
6 that would make these guidelines of a mandatory nature, and
enforceable.
Mr. Wood, let me ask you this. Do you believe that in order
to enhance system reliability--and I believe you have said that
the operation of this particular cable would, in fact, enhance
transmission reliability--do you think it would be appropriate
for the Congress to enact freestanding, at this point,
legislation that would subject this particular cable to the
reliability standards published by the NERC?
Mr. Wood. I think in light of what I heard this morning,
H.R. 6, isn't dead and buried. It sounds like it has come back
to life. So I would say no.
Mr. Boucher. I think that might be an optimistic view.
Mr. Wood. Well, I sat here and listened. Maybe I am a bit
naive, but there is so much in that bill, as you know, and I
testified to that last week when we talked about the Alaska
natural gas pipeline, one of the other kind of tier 1 issues
for me, that really it is just more than making something
mandatory. It is a whole panoply of issues that relate to the
energy picture. So I would hope that the Congress and
particularly the other Chamber could get the full package out
like the House did.
Mr. Boucher. Let me ask you just a broader question
finally. Let's suppose we get to September, and the situation
is unchanged with H.R. 6. We don't see any real forward
movement. The agreement on a special fund for MTBE programs has
not come together, and it really looks like H.R. 6 is going to
die for this Congress. Would you, at that point, think that we
would be well advised to pass on a freestanding basis that
provision of H.R. 6 that would make the NERC rules both
mandatory and enforceable?
Mr. Wood. This is uncharacteristic for me, but can you ask
me then. If indeed it is dead, ask me then.
Mr. Boucher. Ask you then, if it is dead. We will give you
5 months to consider your answer. That is fine.
Well, thank you all very much, and, Mr. Chairman, thank
you.
Mr. Hall. Yes. I think because we have no other members,
they have gone to other meetings, and we--without objection, we
will have the right to submit questions to you in writing and
ask that you answer them within 2 weeks, if you can, of the
time you receive them, and they will go into the record here.
And all of you are very important. You are very important
to the people that you report to. Your time here is important.
The time you took to prepare for this is important, and we
recognize we have one terrific panel here.
And, Pat, we will have you back on Oil for Food on Iraq
probably next week, so don't get too comfortable over there,
wherever you are. But thank you for your contribution to this
subcommittee, to this Congress and to the Nation. Thank you
very much.
[Whereupon, at 12:10 p.m., the subcommittee was adjourned.]
[Additional material submitted for the record follows:]
Prepared Statement of Hon. Hillary Rodham Clinton, a U.S. Senator from
the State of New York
I want to thank Chairman Hall and Ranking Member Boucher for
holding this hearing on an issue of importance to the people of New
York. Today's hearing will provide an opportunity for everyone to
provide their perspective on what I believe has become an unnecessarily
controversial issue.
It is my hope that an airing of the facts at today's hearing will
propel us towards what I believe to be the only sensible outcome--
reenergizing the Cross Sound Cable.
As everyone knows, the Secretary of Energy, Spencer Abraham, issued
an order on May 7 that resulted in the shutdown of the cable on May 19.
I believe this decision is shortsighted, and I am extremely
concerned that it will put Long Island at risk of power failures as we
enter the summer peak demand months.
The Cross Sound Cable has provided proven reliability benefits at a
time when a shortage of generation and transmission facilities
continues to exist on Long Island and in Southern New England. The
Cross Sound Cable transmitted 300 MW of power over the Blackout
weekend, enough to turn on the power in about 300,000 homes on Long
Island. Since beginning full-time operation on September 1, 2003, the
Cross Sound Cable has transmitted nearly one half million megawatt-
hours of electricity to help provide sufficient power to prevent more
blackouts or brownouts on the island.
Additionally, the extra power from the Cable makes more power
available on Long Island to export over another submarine cable into
Southwestern Connecticut when needed, thereby making the regional power
grid more resilient. The independent grid operators have successfully
tested sending power over the Cross Sound Cable to Long Island and then
simultaneously sending power from Western Long Island over another
submarine cable to Southwest Connecticut. During a severe cold spell in
January, Long Island Power Authority was prepared to send 200 megawatts
of power over Cross Sound Cable to help Connecticut if needed. Over the
short to long-term, the Cable thus allows excess New York-generated
power to be transmitted to Connecticut to help prevent blackouts and
brownouts.
The cable also provided voltage support for Connecticut when it was
operating. In fact, ISO New England, the independent operator of the
New England transmission system, made 108 requests to the Cross Sound
Cable for help maintaining a steady operating voltage on the
Connecticut side during the period when the cable was on.
So it is clear that the Cross Sound Cable helps both Long Island
and Connecticut.
But so far, Connecticut has blocked the cable. Environmental
impacts are cited as a major factor in Connecticut's opposition. But
the fact is that studies of the cable have concluded that it has
minimal impacts. The most recent study was conducted last winter while
the cable was on. It showed that there were not lasting impacts from
when the cable was put in place. And it also showed that operation of
the cable did not have any significant environmental impact. So while I
take the issue seriously, I just don't think there's much there.
What I find particularly puzzling about this issue is that
Connecticut has put the Cross Sound Cable in a bureaucratic bind.
Everyone acknowledges that the cable is not currently buried to the
depth required in its permits in seven places. That is the basis for
Connecticut's charge that the cable is illegal. But at the same time,
Connecticut has denied requests from the owners of the Cross Sound
Cable to allow them to bury the cable to the proper depth. It hardly
seems fair that the company is willing to fix the problem, and
Connecticut won't allow them to do it.
And it's hurting New Yorkers. That's why I have introduced
legislation in the Senate that would turn the cable back on, and
Congressman Bishop has introduced that legislation in the House. I hope
that after this hearing, we will be able to move that bill or find some
other way to make progress on this issue.
______
Prepared Statement of Hon. Gary L. Ackerman, a Representative in
Congress from the State of New York
Good morning Chairman Hall, Ranking Member Boucher, Members of the
Subcommittee on Energy and Air Quality. Thank you for holding a hearing
on this important topic, and allowing me to express my strong support
for the Cross Sound Cable. The operation of this cable is imperative to
provide energy security and reliability to the Northeast.
In the wake of the August 14th blackout, we have discovered that
our electricity transmission system is not as reliable as we once
believed. The Cross Sound Cable provides reliability benefits to both
New York and Connecticut. The cable can allow for electricity to flow
in either direction and has been an important tool in stabilizing the
region's energy grid. Since it was activated on August 28th, it has
been utilized over 100 times to provide stabilization for the electric
transmission systems in both states.
The decision to shut down the Cross Sound Cable reduces the supply
of electricity to Long Island just as energy prices and the
thermometers are spiking.
The State of Connecticut is opposing the operation of the line
based on environmental concerns. However, as a result of Secretary
Abraham's emergency order to activate the cable, we have seen that the
operation of the cable has caused no adverse environmental impacts. In
addition, Connecticut opposes operation of the cable because it does
not comply with the permit issued by the Army Corps of Engineers.
However, the State of Connecticut refuses to allow repairs to be made
to ensure compliance or to grant a waiver for the project.
The Secretary of Energy has stated that he will re-energize the
cable in the event of an emergency. I am sorry to say that will be too
little, too late. The idea that the cable should lay dormant until an
emergency occurs, when the operation of the cable may be able to
prevent an emergency, is shortsighted and dangerous. New York suffered
serious economic losses from the last summer's blackout and our region
cannot afford another power failure.
I would like to thank the Subcommittee for its work on this
important subject and encourage action on this issue before the lights
go out . . . again.
______
Prepared Statement of Hon. Rob Simmons, a Representative in Congress
from the State of Connecticut
Mr. Chairman, Mr. Boucher, and other members of the Committee,
thank you for holding this hearing, and for allowing members from
Connecticut to testify on behalf of our home state. This is an issue of
great importance to our state.
Mr. Chairman, the 24-mile Cross Sound Cable, operated by Islander
East, LLC, extends between New Haven, Connecticut and the former
Shoreham nuclear power plant on eastern Long Island, New York. The
cable has been a contentious issue in Connecticut for several years
beginning with its application to the Connecticut Siting Council.
Connecticut is home to four nuclear power plants--two
decommissioned and two operating--as well as numerous coal, gas and
electric plants. Connecticut has taken many of the necessary steps to
diversify its fuel mix in an effort to provide the resources necessary
to try to meet our demand.
That said, there is certainly room for improvement to our system.
Southwest Connecticut is in need of an upgrade to its transmission
system, as its demand often exceeds supply. Unfortunately the Cross
Sound Cable, while delivering energy to Long Island, does nothing to
help with the congestion facing Southwest Connecticut. To add insult to
injury, the cable was laid improperly and as a result does not meet the
depth requirements set by the Connecticut Department of Environmental
Protection.
Recognizing the Sound is a treasure to residents of both
Connecticut and New York, the members of the Connecticut delegation
voiced environmental concerns with respect to the laying of the cable
throughout the permitting process. These concerns included the heat
emitted from the cable, the electromagnetic field it generates and the
disturbing of the sediments contaminated by chemicals and industrial
waste. We continue to harbor these concerns today, in addition to those
associated with the impact of the cable's failure to meet depth
requirements.
U.S. Secretary of Energy, Spence Abraham, energized the cable
following the blackout last August that plunged thousands into the
dark. The order to energize a cable that did not meet Connecticut
permitting requirements overrode a decision by the state--effectively
wrestling legal authority from Connecticut.
The cable remained energized until last week when the Secretary
issued a finding that it would have no impact on preventing another
blackout. Sadly, the good news was short-lived, and now we are holding
this hearing and fighting legislation intended to activate the cable
indefinitely.
Mr. Chairman, we have a serious situation. Energizing the Cross
Sound Cable undermines the sovereignty of the State of Connecticut. As
elected representatives, we have a duty to protect our citizens and the
environment in which they live and rely on for their livelihood. The
right of the state must be considered in this process.
Thank you for considering my statement. I look forward to working
with you on this issue.
______
Prepared Statement of Hon. Carolyn McCarthy, a Representative in
Congress from the State of New York
Mr. Chairman, I welcome this opportunity to offer my testimony on
an issue that is critically important to Long Island: the cross-Sound
cable. I am in strong opposition to Secretary Abraham's decision to
shut down the operation of the cross-Sound cable and I would urge you
to allow permanent use of the cable.
The loss of the cable, and the 330 megawatts of power that it
carries, will have severe economic consequences for our region. In
addition, without the use of the cable our power on Long Island is
simply less dependable.
Power companies are already moving to purchase replacement power
and have said that the loss of the cable will result in as much as $38
million dollars in additional costs this year. Most of these new costs
will be passed onto consumers. On the Island we already have close to
the highest electric prices in the country. With two-dollar gallons of
gas and four-dollar gallons of milk, how can we ask Long Islanders to
shell out even more cash for rising electricity rates? Long Islanders
simply cannot afford this extra cost.
Summer is approaching and this is peak usage season for
electricity. Without the use of the cross-Sound cable Long Island power
companies will be short critical amounts of power. The loss of the
cable will eliminate the flexibility power companies need to respond to
the increase in usage during the summer months or during an emergency.
This could result in many power outages and brownouts across Long
Island this summer as well as a slower response times if an emergency
should occur. This cable is insurance and a type of safety valve when
it comes to dependable and reliable power on Long Island.
The Dept of Energy has said it was not able to conclude that the
blackout, which hit the northeast, would have been prevented on Long
Island if the cable were open and running. That may or may not be the
case, but what we DO know is that keeping the cable open permanently
will certainly prevent other types of blackouts, as well as help
prevent sharp spikes in energy prices that will occur should this cable
stay off. After living through last summer's blackout why would anyone
want to make it harder for any region in the country to get power when
it's needed?
Connecticut authorities have argued that the cable causes
environmental damage. This is simply not the case. The truth of the
matter is--when the cable line was built it caused minor and temporary
damage to shellfish habitat. Today the damage has naturally been
repaired and the actual running of the cable does not cause any type of
environmental damage. The State and jurisdictional agencies involved
with this issue have determined that the use of this cable will not
have any adverse environmental impact.
Environmental groups on Long Island are not exactly silent when
they see something harmful being done to the environment and yet no
group has come out against the use of this cable. However,
environmental groups have spoken out against the EPA's proposed dredge
spoils dumping in the Long Island Sound, which Connecticut supports.
These dredge spoils will create an ecological hazard far worse than any
threat from the cable and if Connecticut officials truly cared about
the environment or the health of the Sound then they would be against
this dredge dumping proposal.
Another argument of Connecticut authorities against the use of this
cable is that the it presents a navigational hazard because it is not
buried deep enough at seven locations. The reason for this is that when
the cable was being laid it was found that in some places, going a few
feet deeper would cause environmental damage. There has not been one
cited navigational problem from these few areas where it is a small
number of feet short of being buried to regulation. Connecticut
officials are demanding the cable be idle until those areas are buried
deep enough but they have banned repairs that would make the cable meet
the requirements.
I urge quick and immediate action to keep the cross-Sound cable
open permanently so that every time there is an emergency or depletion
in supply we do not have to wait for a bureaucratic process to pan out
before we see relief. Allowing a perfectly good cable to lie on the
bottom of the Long Island Sound unused is absolutely preposterous when
it could greatly benefit many people in our region. Long Islanders
deserve reliable energy at reasonable prices and allowing the permanent
opening of this cable will provide this.
Thank you, Mr. Chairman for holding this hearing today and for
giving me the opportunity to submit testimony.
______
Prepared Statement of Eliot Spitzer, New York State Attorney General
It is now nine months since the August, 2003 blackout demonstrated
the vulnerability of the Northeast's electric grid. As thermometers
throughout the Northeast begin to move past the 80 degree mark, last
summer's outage is on all of our minds.
For decades, the nation's power generators, high voltage bulk
transmission lines and distribution systems have been cobbled together
into a patchwork network. The August 2003 blackout revealed that the
electric grid is fragile at its seams. It also showed us the vast
number of people and businesses who rely upon the system--within New
York's borders, throughout the Northeast and across the border in
Canada. It highlighted our responsibility to strengthen the grid, to
ensure that we do not have another massive power outage.
To that end, I support continued operation of the Cross Sound cable
between Long Island and Connecticut.
In order to prevent future outages, on August 28, 2003, the
Secretary of Energy appropriately and lawfully ordered the cable into
operation. To strengthen the electric grid immediately, the Secretary
should order the continued operation of the cable.
the continuing vulnerability of the bulk power transmission grid is an
EMERGENCY REQUIRING ACTION BY THE SECRETARY OF ENERGY
Electricity is supplied in North America through large
interconnected networks, extending in a grid across the United States
and Canada. This grid is not only more efficient than independent
generator-consumer transmission systems, but is also generally more
stable and reliable, since the system as a whole can absorb
disturbances that would otherwise cause local power outages. The sina
qua non of the grid's functioning, however, is adequate transmission
capacity.
Because the Cross Sound cable is one of only six power links
connecting Long Island to the mainland, it is critical to ensure
adequate transmission capacity and reliable power on Long Island.
Sufficient power supply is important not only for the well-being of
Long Island residents, but, since the effects of severe local deficits
ripple through the network, for the region as a whole. An
interconnected system can spread the effects of disturbances over a
wide area, quickly restoring balance in the region where the problem
originates without compromising the system as a whole. This can only
work, however, when there is sufficient transmission capacity.
The August 14, 2003, blackout is illustrative. The Report of the
U.S.-Canada Power System Outage Task Force emphasizes the importance of
transmission capacity in explaining why that blackout did not cascade
further. ``Higher voltage lines and more densely networked lines . . .
are better able to absorb voltage and current swings and thus serve as
a barrier to the spreading of a cascade. As seen in the [August 14,
2003 blackout . . . where] . . . there were fewer lines, each absorbed
more of the power and voltage surges and was more vulnerable to
tripping.1
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\1\ Final Report on the August 14, 2003 Blackout in the United
States and Canada: Causes and Recommendations at 75-77.
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Of course, no two power crises are exactly alike. We do not know
whether there will be a repeat of last summer's cascading blackout,
much less when or where a transformer might fail, a line might short or
lightening might strike. As the Wall Street Journal summarized, the
Task Force's Final Report ``offers little reason to believe the
electric system is hardier today'' than it was on August 13,
2003.2 Given that the grid is not demonstrably more robust
than it was on August 14, 2003, we must do what we can to ensure that
this summer does not bring another massive blackout. Maintaining the
operation of the Cross Sound cable provides a means of mitigating the
risk of another such outage.
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\2\ Rebecca Smith, ``Blackout Could Have Been Avoided,'' The Wall
Street Journal, April 6, 2004, at A6; see also Rebecca Smith, ``Faults
Still Plague Electric System as Peak Summertime Use Nears,'' The Wall
Street Journal, April 13, 2004, at A1 (``As the summer months approach,
North America's electricity system remains frail and many of the
shortcomings that contributed to a massive failure eight months ago
have yet to be fixed.'')
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THE SECRETARY OF ENERGY HAS THE AUTHORITY TO ORDER CONTINUED OPERATION
OF THE CABLE
The Secretary's authority under the Power Act applies both when the
emergency is an immediate threat to the power supply and where the
power supply is in an extended period of insufficiency. Clearly, such
an insufficiency exists. Our electric transmission grid is as
vulnerable to another such crisis as it was on August 14, 2003. This
vulnerability constitutes an emergency from which the grid will not be
relieved until the causes are rectified, and the only way to accomplish
this is through the addition of robust transmission capacity.
The Federal Power Act authorizes the Secretary of Energy to act to
protect the power supply during an emergency threatening or disrupting
the adequate operation of the electric grid.3 The Act also
transferred to the Secretary the authority previously vested in the
Federal Power [now Federal Energy Regulatory] Commission 4
by 824a(c), which provides in pertinent part, ``whenever the
Commission determines that an emergency exits . . . the Commission
shall have authority . . . to require by order such temporary
connection of facilities and such generation, delivery, interchange, or
transmission of electric energy as in its judgment will best meet the
emergency and serve the public interest.'' 5
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\3\ Id.
\4\ 42 U.S.C.A. 7151(b).
\5\ 16 U.S.C.A. 824a(c).
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The Department of Energy regulations implementing 824a(c) set out
several definitions of ``emergency,'' among them ``extended periods of
insufficient power supply'' or ``a regulatory action which prohibits
the use of certain electric power supply facilities.'' 6
Given the fragile nature of the Northeastern electric transmission grid
and the regulatory obstacles that are keeping the Cross Sound cable
from operating, the Secretary of Energy clearly has authority to apply
824a(c) to order the cable into operation. Moreover, the
environmental issues raised in connection with the operation of the
cable are without merit.
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\6\ 10 C.F.R. 205.371.
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On August 14, 2003, the Cross Sound cable had been physically
complete for over a year but was not in operation due to permitting
issues. Within hours of the August 2003 blackout, the Honorable Spencer
Abraham, United States Secretary of Energy, ordered the immediate
activation of the cable to alleviate the power supply emergency in both
New York and Connecticut. While the original order was scheduled to
expire on August 31, 2003, on August 28, 2003, Secretary Abraham again
invoked his authority and directed that the Cross Sound cable continue
operating until the he makes a formal determination that the current
emergency has passed.
Just a week and a half ago, on May 7, 2004, citing the findings in
the U.S.-Canada Power System Outage Task Force Report, Secretary
Abraham allowed the Cross Sound cable to be shut down.7 I do
not agree with this outcome.
---------------------------------------------------------------------------
\7\ Department of Energy Order No. 202-03-4, May 7, 2004.
---------------------------------------------------------------------------
While, as the Secretary of Energy stated in his May 7 order, the
Task Force Report did not ``identify any particular role that the Cross
Sound Cable would have played in stopping the spread of the outage,''
the Report also did not identify any reason to believe that the grid is
any less vulnerable than it was last August.8 This
continuing vulnerability of the Northeast's transmission grid to
disruptions and even blackouts is an emergency that the Secretary of
Energy may and should address under the Federal Power Act.9
---------------------------------------------------------------------------
\8\ Id.
\9\ 16 U.S.C.A. 824a(c).
---------------------------------------------------------------------------
CONCLUSION
In the words of the Connecticut Siting Council, operation of the
Cross Sound cable can be expected to ``enhance the inter-regional
electric transmission infrastructure . . . [and] improve the
reliability and efficiencies of [the interconnected] systems by
providing generation resources that can be drawn upon in the event of
changes in electricity demand or supply.'' 10 The system
degradation that results from even temporarily blocking the flow of
electricity through the Cross Sound cable is a substantial harm to the
people of New York and the Northeast and is contrary to the public
interest.
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\10\ Cross-Sound Cable Company, LLC application for a Certificate
of Environmental Compatibility and Public Need, Docket No. 208
(Connecticut Siting Council, January 3, 2002), available at http://
www.ct.gov/csc/ lib/csc/Fof208.doc.
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Congress should act quickly to ensure that the Secretary of Energy
orders the Cross Sound cable back into operation.